5 questions about the Dow-DuPont megamerger

The financial press is buzzing about the merger of two venerable members of the Fortune 500 as the Dow Chemical-DuPont deal, valued at about $69 billion, caps the biggest year in history of dealmaking.

According to Dealogic, this combination is the fifth largest of the year and among the biggest of all time. While both companies are all about why this deal is a masterstroke, critics are arguing that the companies would be better off staying independent and have accused them of trying to make a quick buck at the expense of long-term growth.

CBSMoneyWatch has decided to take a closer look at why two of Corporate America's oldest companies -- Dow Chemical (DOW) and DuPont (DD) are both more than 100 years old -- concluded that they would be better together than separate.

1) What is a "merger of equals"?

More often than not, transactions that are described as "mergers" are really "acquisitions." Some companies avoid using the "a-word" for public relations reasons. Under terms of this deal, shareholders will each have equal stakes of the merged company called DowDuPont, excluding preferred shares. Dow CEO Andrew Liveris will be the executive chairman of the new company, while his counterpart at DuPont, Edward Breen, will keep the CEO title after the deal closes.

2) How unusual is this deal?

In a word, very. Among the reasons mergers of equals are rare is that they require high-powered executives to share power. Wall Street also isn't keen on them because a few, like Sprint-Nextel and Daimler-Chrysler, are widely considered to be disasters. Adding to the complications are Dow's and DuPont's plan to split themselves into three separate companies. Splitting into two companies is hard enough (just ask Hewlett-Packard, now HP Inc. (HPQ) and Hewlett Packard Enterprise (HPE)). However, the DowDuPont three-way split may not occur until 2018.

3) Why are they doing this?

Activist investors have been pressuring both companies to split up to boost their share prices. DuPont fought billionaire Nelson Peltz's efforts to gain board representation for two years, with CEO Ellen Kullman winning a hard-fought proxy battle. A few months later, Kullman announced her retirement. Dow welcomed board nominees backed by billionaire William Loeb last year, avoiding a similar battle. Both Peltz and Loeb are said to be pleased with today's deal. As for other shareholders, that's tough to say. Shares of DuPont and DuPont traded down today.

4) What about layoffs ?

Dow and DuPont estimate the deal will result in about $3 billion in "cost synergies." Like it or not , a large part of those savings will come from doing more work with less people. Wilmington, Delaware-based DuPont had already announced plans to trim 5,000 workers ahead of the merger, about 10 percent of its worldwide workforce. Dow has been reducing headcount for the past few years.

5) Are there risks?

Now that the press releases are out, the hard work begins. Countless details need to be addressed, ranging from the name of the new company to connecting key computer systems in area such as accounting. There are also cultural and regulatory issues. Dow and DuPont are used to doing things their own way for more than a century. Figuring out a way to operate together is often easier said than done. Nor are Dow and DuPont making any promises that antitrust regulators will approve the deal.