Chemical giants DuPont and Dow Chemical Co agreed to merge in a deal that would value the two firms at $130 billion.

The deal that was announced on Friday combines two of the largest and oldest chemical producers in the Unites States. Reuters reported that it will be facing much regulatory scrutiny, especially on its agricultural business. However, leaders of the company said there will be minimal overlap and only minor asset sales.

According to This Is Money the all-share deal will lead to more industry condensation. The combined giant firms will go on an eventual split into three businesses, according to Dow and DuPont. The split will create businesses that would specialize on farming, materials and products.

DuPont chief executive Ed Breen will head the merged company, while Dow Chemical chief executive Andrew Liveris is appointed as the executive chairman.

"I think the big catalyst would have been (DuPont Chief Executive Ed) Breen coming in, his track record of extracting value from companies, and the fight that DuPont had gone through with Nelson Peltz," said Key Private Bank analyst Rob Plaza. "We may see more consolidation."

The company is trying to rebound from the challenges of falling demand on farm chemicals as crop prices decline and the stronger dollar. The companies' plastic sector has been thriving, however, due to cheap natural gas prices.

Newsweek wrote that Dow Chemical shareholders will receive a DowDuPont share for every Dow Chemical share they hold. Meanwhile, DuPont shareholders will be given 1.282 DowDuPont shares for every DuPont share they hold.

According to analysts, potential tax saving are among the major reasons for the merger. SunTrust Robinson Humphrey analyst James Sheehan, said, "They need to merge first in order for the subsequent spinoffs to qualify as tax-free transactions in the United States."

This colossus merger will let Dow and DuPont rejig their assets depending on the various fortunes in their businesses.