The Wall Street Journal reported that E.I. du Pont de Nemours and Co. (NYSE: DD), better known as DuPont, and Dow Chemical Co. (NYSE: DOW) may merge. DuPont employs 62,000 people, while Dow Chemical employs 51,000. One major reason for mergers is to cut costs. The two companies have enough overlapping businesses that a lot of people will lose jobs. The question is how many.
The 113,000 workforce of the combined company would operate one of the world’s largest suppliers of chemicals for agriculture. Both companies provide industrial chemicals and make plastic products. Both provide electrical products as well.
Dow and DuPont each have only modest margins. Last year, DuPont made $3.6 billion in net income on $35 billion in revenue. Dow Chemical made $3.8 billion on $58 billion. Marrying the two companies should boost their combined bottom line by hundreds of millions of dollars, if not more.
The stocks in each company moved up by over 3% when the rumor hit Wall Street. Since DuPont trades well below its 52-week high, investors should be happy. Someone loses in many mergers, however. Some members of management are fired, and so are a large number of other workers. The open issue in a DuPont merger with Dow Chemical is how many?