Sympathy Ways To Play Chemical Space M&A Amid Dow Chemical-DuPont Merger Rumor
#PreMarket Prep is a daily trading idea radio show hosted by Joel Elconin and Dennis Dick. Tune in to the daily broadcast live Monday-Friday at 8 a.m. ET here.
On Wednesday, Benzinga's #PreMarket Prep hosts started the show looking into the Dow Chemical Co (NYSE:DOW) - E I Du Pont De Nemours And Co (NYSE:DD) merger.
According to a Wall Street Journal article published on late-Tuesday, Dow Chemical and DuPont are in advanced discussions to merge, and then break up the combined company into three separate ones: an agriculture company, materials/materials sciences company and a specialty products company.
Related Link: Dow Chemical, DuPont Shares Explode After 'Mother Of All' Merger Report
While no official announcement was released at that time, the stocks reacted very positively to the rumor. Dow Chemical was up 11.96 percent on Wednesday trading, hitting an all-time high, while DuPont rose 11.85 percent.
Now, as the shares of these companies are already up substantially on the merger rumors, how can investors play this news?
A few ETFs have huge holdings in both these companies, Elconin and Dick assured. A few names include:
- Materials Select Sector SPDR (NYSE:XLB), which has an 11.52 percent holding in Dow Chemical and an 11.62 percent exposure to DuPont.
- iShares Dow Jones US Basic Mater. (ETF) (NYSE:IYM), with more than 11 percent exposure to each of these companies.
Other chemical companies that could also get a lift from the news include:
- Eastman Chemical Company (NYSE:EMN), which rose 2.87 percent on Wednesday trading.
- Westlake Chemical Corporation (NYSE:WLK), up 2.57 percent.
- Praxair, Inc. (NYSE:PX), up 0.32 percent<./li>
Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.
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