The $130 billion mega-merger of Dow Chemical and DuPont instantly establishes a major player in the building-products industry.

The deal should close in the second half of 2016. When it does, it will create a huge company, DowDuPont, with global holdings that span chemicals, materials, agriculture, electronics and much more. Within 18-24 months of the merger’s close, DowDuPont plans to split into three publicly traded companies, including one focused on material science that’s expected to have estimated annual revenues of $51 billion. Another company will focus on agriculture, and the third will focus on specialty products.

The material-science spin-off will be of particular interest to the glazing and fenestration industries. It will include performance materials, chemicals, performance plastics and infrastructure solutions.

“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,” said Andrew N. Liveris, Dow’s chairman and CEO. “Over the last decade our entire industry has experienced tectonic shifts as an evolving world presented complex challenges and opportunities—requiring each company to exercise foresight, agility and focus on execution. This transaction is a major accelerator in Dow’s ongoing transformation, and through this we are creating significant value and three powerful new companies.”

Liveris will become executive chairman of the newly formed board of directors.

“This is an extraordinary opportunity to deliver long-term, sustainable shareholder value through the combination of two highly complementary global leaders and the creation of three strong, focused, industry-leading businesses,” says Edward D. Breen, chairman and CEO of DuPont. After the merger closes, Breen will become the CEO of DowDuPont.

An advisory committee will be created for each of the businesses expected to be spun off. Breen will lead the Agriculture and Specialty Products committees. Liveris will lead the Material Science committee.

DowDuPont will maintain dual headquarters in Wilmington Del., and Midland, Mich., but it also said it will seek to “optimize” its physical footprint, which could mean plant closings.

The mega-deal could also mean layoffs. DuPont published a statement on Friday announcing $650 million in “employee separation costs.” Dow aims to make $300 million in cuts before the deal closes.

The deal is expected to face intense anti-trust scrutiny, though the break-up into three companies could calm regulators, according to USA TODAY.

Dow to Take Over Dow Corning

As part of the merger, Dow Chemical announced that it would become the 100 percent owner of Dow Corning, which is currently a 50/50 venture between Dow and Corning. Dow says the Dow Corning acquisition would yield $400 million in “run rate annual cost and growth synergies,” and more than $1 billion in additional earnings in the first year after the transaction closes.

Dow Corning markets more than 7,000 products such as sealants, adhesives, rubbers, lubricants, silicone oils and solvents. Many are used in the glazing and fenestration industries for both commercial and residential applications.

“This transaction is another milestone aligned to Dow’s strategic agenda to provide clarity on our joint ventures and demonstrates our ongoing and relentless focus on creating shareholder value,” said Liveris. “Today represents the transition of a very successful 72-year partnership between Dow and Corning. Dow is the natural owner of Dow Corning. Fully aligned to our portfolio strategy, the addition of a silicones position will expand our product offerings across multiple businesses while driving innovative solutions that will enable us to go deeper into key end markets by leveraging Dow’s existing, strong science and engineering competencies across new chemistries.”

Dow Corning’s headquarters will remain in Auburn, Mich.

Opportunities Ahead?

Michael Collins, the managing director of Building Industry Advisors in Chicago, says the mega-merger could present opportunities for suppliers of adhesives and products that compete with Dow and DuPont.

“Whenever there is a merger among very large companies like this, a certain opportunity is created for mid-sized and regional companies in that segment,” Collins says. “Specifically, any customer that was previously buying from both Dow and DuPont in order to ‘keep the suppliers honest’ with regard to pricing, terms, lead times, etc., just lost that duality.  Thus, a strong regional player may be able to win some business in order to position themselves as a backup supplier.  Over time, outstanding execution can help a backup relationship like that grow into a major customer relationship.”