Dow, DuPont considering merger; move could affect jobs in Appalachia, rural areas

Dow Chemical Co. and DuPont Co. are considering a merger in a deal valued about $120 billion, Jeffrey McCracken and Jack Kaskey report for Bloomberg. "A deal may be announced as soon as this week, according to people with knowledge of the matter who asked not to be identified because the information is private. After the merger, the company would break into three businesses—agriculture, specialty chemicals and commodity chemicals—because of regulatory and other issues, one of the people said. There’s no guarantee a deal will get done, and talks may still fall apart, the people said. Shares of both companies jumped."

The merger would "create the world’s second-biggest chemical company behind BASF SE as well as the largest seed and pesticide company, surpassing Monsanto Co.," reports Bloomberg. It also could lead to total cost savings of $3 billion to $4 billion, said Hassan Ahmed, an analyst at Alembic Global Advisers.

News of the possible merger has left some rural areas anxiously waiting to see how it could affect local businesses and jobs. In West Virginia, "the chemical manufacturing industry makes up about one-fifth of West Virginia’s manufacturing jobs," according to West Virginia University, Andrew Brown and Ken Ward report for the Charleston Gazette-Mail.

Karen Facemyer, president of the Polymer Alliance Zone, who said chemicals make up the second-largest international export commodity in West Virginia behind coal, "said it is far too early to speculate on what any type of merger could mean for the state," Brown and Ward write. Matt Ballard, president of the Charleston Area Alliance, told the Gazette-Mail, “It is not something we have control of as a local economic development authority, but it’s something that we are going to monitor. There are tremendous opportunities for the chemical industry in Appalachia. I don’t think that would be ignored by any company that might be created.”

There is also concern about layoffs in Delaware, where DuPont's headquarters are currently located, Jeff Mordock and Jonathan Starkey report for The News Journal. "Dow, headquartered in Midland, Michigan, would likely be the lead company in the deal because it is approaching the transaction from a position of strength," said Jeffrey Sonnenfeld, a professor of business at Yale University. "That would mean the headquarters of any combined company would most likely stay with Dow in Michigan." Overall, DuPont has about 7,000 employees in Delaware. Dow has about 53,000 employees worldwide. DuPont has about 64,000.