Dow Chemical and DuPont are in the late-stage talks for $120B merger

The U.S. companies Dow Chemical Co. and DuPont Co. are in advanced talks for a massive combination that would create the largest chemical company with a market value of more than $120 billion. The merger would then followed by a split into three different businesses including agricultural, specialty chemicals, and plastics.

The chemical giants could announce a merger in the next few days, with each company having a market capitalization of about $60 billion, The Wall Street Journal reported. Dow Chemical's CEO Andrew Liveris is expected to be the executive chairman of the new company while DuPont's CEO Edward Breen would remain in the position.

The deal of the two companies is said to be billed as a merger of equals, which means that there would not be a big premium for either set of shareholders. According to Reuters, Bernstein analysts said that the deal would create a giant company with more than $92 billion annual sales and strong position in chemicals industries.

The shares of both companies jumped after the merger leak reported. According to USA Today, Dow Chemical shares rose 11.9 percent, finishing at $56.97 on Wednesday. DuPont shares also rose 11.9 percent to $74.50.

The deal would be the 10th large acquisition with more than $50 billion announced this year. The companies have struck about $4.35 trillion of takeovers so far in 2015. The mergers and acquisitions of the U.S. company rose 55 percent to $2.35 trillion this year.

Dow Chemical and DuPont have been restructuring their businesses under pressure from shareholders to slim down and focus on fast-growing units. The companies began shedding some products that made them famous.

In agricultural business, the merger would create a company which sells about 17 percent of the world's pesticides. Analysts said that a combination of both companies would hold 41 percent of the U.S. corn seed business and 38 percent of the soybean market.

In addition, both companies also have divisions that make films, coatings, packaging technologies and chemicals used in the food, pharmaceutical, industrial and automotive sectors.

Dow Chemical's CEO said last month that the company was exploring deal possibilities for its agriculture division, which had $7.3 billion sales in 2014 while DuPont was exploring agricultural deal possibilities with Dow Chemical. But separately, DuPont was also discussing a potential combination of its agriculture division with the world's largest agrochemical company Syngenta AG.

Switzerland's Syngenta rejected a $47 billion offer from the U.S. group Monsanto in August and declined a $42 billion offer from state-owned China National Chemical Corporation last month.

The deal between Dow Chemical and DuPont would face regulatory approval in several countries. The  regulators could require both companies to sell some of their businesses to restrain their influence in particular markets.