Dow Chemical a Good Investment, With or Without the DuPont Merger

The past year has seen the announcement of several mega-mergers in the corporate world. The proposed combination of AT&T and Time Warner has probably gotten the most attention in recent months, given its impact on the communications world.

But another gargantuan deal with a similar potential to reshape the corporate landscape is the proposed merger of two of the world's three biggest chemical companies -- Dow Chemical (DOW) and DuPont (DD) . Shares of both companies fell slightly in Tuesday trading. 

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If the deal goes through -- it still has to be approved by the European Union as well as U.S. officials -- it will create a powerhouse that will thoroughly dominate the worldwide chemicals market, dwarfing even such formidable competitors as BASF and Monsanto.

One way the two companies could win antitrust approval is to sell off a few of their existing assets, while retaining the core businesses that make the companies great. Bloomberg reported this month that Dow is seeking a buyer for its copolymers business to ease regulators' concerns. Meanwhile, DuPont is looking to shed its herbicides business.

Even in the event that the deal is blocked or falls through, Dow Chemical will remain a top-flight company that is worth owning in its own right. Over its long history, the company has offered strong returns, in the form of both dividends and capital gains. Its current yield is 3.43%, and its price-earnings ratio is under 10.

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