Midland — – Elected officials, residents and workers here are cautiously optimistic that Friday’s announced equal merger of industrial giants Dow Chemical Co. and DuPont Co. will help the region and create more jobs.

The merger, the largest ever in the chemicals industry and one of the largest megadeals of 2015, will combine products from both Midland-based Dow and Wilmington, Delaware-based DuPont into a $130 billion company — if regulators and the company boards approve.

The two companies, with operations worldwide, have invented products that are so ubiquitous that they are known simply by their brand names. Among them: Ziploc bags, Saran Wrap, Teflon, Nylon and Kevlar.

The combined company will be named DowDuPont. It will be spun off within two years into three independent, publicly traded firms that focus on agricultural products including herbicides and genetically modified seeds; commodity chemicals including plastics; and specialty chemicals such as those used in solar panels, officials said.

Michigan elected leaders and some Midland residents said they were reassured that the deal is a true merger of equals. Dow Chief Executive Officer Andrew Liveris, 61, will become executive chairman, while DuPont CEO Ed Breen, 59, will be CEO of the new company.

There will be dual headquarters, in Midland and Wilmington. The board will be split with eight members from Dow and eight from DuPont.

“What we understand is that, out of this merger, one of the new companies will be a natural science company,” Midland Mayor Maureen Donker said. “They are calling that the new Dow. That headquarters will be located here in Midland. ... This one will be the largest of the three companies by revenue size.

“As a natural science company, it will be second only to BASF. So this will be a large operation.”

At this point, Donker said it is unclear what kind of changes face the more than 5,000 Dow workers in her city. The planned corporate marriage could take 18-24 months.

“Whenever there is a merger, there are synergies, and those synergies impact people,” she said. “That’s a detail we have no information about now. That’s what makes this hard.”

State Rep. Gary Glenn, R-Midland, said he was similarly optimistic after talking to Dow Chemical officials.

“The new materials division that will be headquartered in Midland will be larger than Dow Chemical is now, so the potential for job creation in this region is significant,” Glenn said.

Gov. Rick Snyder greeted the merger news by asserting that Michigan’s increased job-creating competitiveness makes a strong case for keeping employment in the state.

“There are numerous advantages for the company to continue having a strong presence in Michigan,” Snyder said in a statement. “We’ll work with leaders to emphasize the value of Michigan’s many resources, especially its skilled people, to support its efforts in our state.”

Investors pushed deal

The deal comes after two years of pressure from activist investors who argued that shareholders of both companies would realize greater value if they were broken up.

Under the terms of the merger, Dow shareholders will receive a fixed exchange ratio of one share of DowDuPont for each Dow share, and DuPont shareholders will receive a fixed exchange ratio of 1.282 shares in DowDuPont for each DuPont share. Dow and DuPont shareholders will own about 50 percent, respectively, of the combined company.

“This transaction is a game-changer for our industry and reflects the culmination of a vision we have had for more than a decade to bring together these two powerful innovation and material science leaders,” Liveris said in the statement.

Breen called the merger a leap forward to higher growth and value for the company.

“Longer term, the three-way split we intend to pursue is expected to unlock even greater value for shareholders and customers and more opportunity for employees as each business will be a leader in attractive segments where global challenges are driving demand for these businesses’ distinctive offerings,” the DuPont chairman and CEO said in a statement.

Dow also announced Friday that it intends to become the sole owner of the Dow Corning Corp. after being part of a split joint venture since 1943. Dow Corning had 1,350 workers in Midland in 2013, according to Midland Tomorrow, the region’s nonprofit economic development agency.

“With Dow and Dow Corning coming together, Dow will extend its participation in consumer solutions and infrastructure solutions segments by increasing Dow’s product offerings in several attractive end-use applications such as building and construction, consumer care and automotive,” Dow said in a statement.

DuPont’s legacy reaches to 1802 when E. I. du Pont built a series of gunpowder mills along the banks of the Brandywine River near Wilmington.

Dow harkens back to 1897, after Herbert Henry Dow discovered a new way to extract the element bromine — then a useful ingredient in medicine and photographic materials — from brine located in wells around Midland.

The DuPont and Dow board members will choose the leaders of the three spinoff companies. Dow has a lot at stake, with 53,000 employees across the world.

‘Hopeful for the future’

The merger comes after DuPont moved its headquarters this year out of its longtime downtown Wilmington building and into a suburban office park, while Dow Chemical announced in July it planned to construct a building on its 150-acre corporate headquarters campus. Midland, as a company town, has greatly benefited from Dow Chemical’s jobs largesse.

Dow workers John Radler, Kip McGinnis and Dave Orbeck said they thought the merger would benefit the city.

“From what they’ve announced so far, there doesn’t seem to be a worry for us,” said Radler, a chemical engineer who has worked there 33 years. “We’re hopeful for the future. I think Dow will continue to be headquartered here.”

McGinnis, an electrical engineer, Orbeck, a chemical engineer, and Radler said they have weathered several rounds of belt-tightening and cuts at the plant during the past decade. They see the combination of Dow Chemical and DuPont as a move toward a stronger future. While DuPont announced plans to reduce its workforce before the deal is finalized, they noted, Dow has made no similar projection.

“The community’s healthy and Dow continues to invest and commit to this community and has reached out to the Saginaw and Bay City areas, too,” said Orbeck, a 30-year employee of the company.

As evidence, locals point to Dow Diamond Stadium, home of the Great Lakes Loons minor league baseball team; a modish east-end structure containing shops, eateries and medical offices across from the ballpark; and a condominium-and-shop building under construction in downtown. All are the result of Dow’s efforts to create attractions to help recruit and keep qualified young workers.

“The good news to me is Dow’s been spending a lot of money in the whole area, making places for people they want to come here,” said Jerry Meier, the owner of Meier Camera.

He said there was anxiety around town as speculation swirled prior to official confirmation the companies would combine, but it was eased by details that have been released.

Despite its size and complexity, the merger deal could overcome antitrust concerns with modest divestitures, according to analysts who track the companies. The product overlap isn’t extensive and the focus will probably be on seeds and crop chemicals, said Jason Miner, an analyst at Bloomberg Intelligence.

Detroit News Staff Writer Jim Lynch and Bloomberg News contributed.


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