The merger transaction is expected to close in the second half of 2016, subject to closing conditions, including regulatory approvals, and approval by shareholders.
Separation of DowDuPont would be expected 18-24 months following the closing of the merger.
They intend to separate DowDuPont into three independent, publicly traded companies through tax-free spin-offs.
Rumours about the merger surfaced earlier this week.
Andrew Liveris, Dow's chairman and CEO described the merger as a ‘game-changer’.
"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 merger of equals significantly enhances the growth profile for both companies, while driving value for all of our shareholders and our customers.”
Split into three
The companies will include an agriculture company; a Material Science firm and a Specialty Products business.
The Material Science Company will consist of DuPont's Performance Materials segment, as well as Dow's Performance Plastics, Performance Materials and Chemicals, Infrastructure Solutions, and Consumer Solutions (excluding the Dow Electronic Materials business) operating segments.
Combined pro forma 2014 revenue for Material Science is $51bn.
The Specialty Products Company will include DuPont's Nutrition & Health, Industrial Biosciences, Safety & Protection as well as the Dow Electronic Materials business.
Combined pro forma 2014 revenue for Specialty Products is $13bn.
Merger of equals
Dow and DuPont shareholders will each own 50% of the combined company, on a fully diluted basis, excluding preferred shares.
The transaction is expected to deliver $3bn in cost synergies, with 100% of the run-rate cost synergies achieved within the first 24 months following the transaction closing. Additional upside of $1bn is expected from growth synergies.
Edward Breen, chairman and CEO ofDuPont, said the merger will create near-term value through cost synergies and upside from growth synergies.
“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.”
DuPont is the owner of Danisco’s probiotics, enzymes, sweeteners, colours and flavours business, along with the Solae soy brand. DuPont paid $6.3bn (€5.75bn) for Danisco in 2011.
Andrew Liveris will be executive chairman and Edward Breen will be CEO of the combined company.
DowDuPont will be dual headquartered in Midland, Michigan and Wilmington, Delaware.
Meanwhile, DuPont has revealed a 2016 plan designed to reduce $700m in costs compared with 2015 including 10% of the firm’s workforce being impacted.
As a result, it expects to record a pre-tax charge to earnings of $780m, consisting of $650m of employee separation costs and about $130m of asset-related charges and contract terminations.