DowDuPont (NYSE:DWDP), formed just a couple of years ago, is now preparing to be broken apart. Motley Fool's Nick Sciple and Fool.com contributor Lou Whiteman discuss the issues the two companies faced prior to the merger, the history of how they came together, and the rationale for the breakup in this segment of Industry Focus: Energy.

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This video was recorded on April 11, 2019.

Nick Sciple: Lou, let's talk a little bit about DowDuPont. First, I want to give a little bit of history on where we are and how we got to where we are today. The company, DowDuPont, as it exists today traces back to a merger back in 2015. From the beginning, the goal was to divide into three companies -- bring these companies together, create some synergies, then subdivide into three companies. We have started to see that just in the recent weeks. On April 2nd, the new Dow began trading on the markets. We're going to have some more splits coming on down the line.

Before we dive into those new companies, Lou, can you just give us a 10,000-foot-view history lesson on how we got to where we are today with DowDuPont?

Lou Whiteman: Sure. You have to go back to the early part of this decade. Both Dow and DuPont separately were the product of years and years of bolt-ons and consolidation in the chemicals. We had two sprawling chemical conglomerates, two companies that were in a range of different businesses. Some they were good at, some they weren't so good at. They had the feel, the stink, of an old company that just can't quite fire on all cylinders.

Both had activists get involved. There was a lot of talk -- are they going to be split up? Are they going to do divestitures? Asset sales? Both were companies that were in need of a catalyst, and that catalyst came in the form of Ed Breen, who took over at DuPont. Ed Breen, for us old-timers... it depressed me to look back. Let's go back 15 years, when it looked like Tyco International was going to just implode under the weight of scandal. Ed Breen did a masterful job of picking out what's good, what's not, putting it all together, splitting apart, and really creating value. One of the most impressive jobs I've ever seen by a transformational CEO, by an industrial.

He comes to DuPont. He says, "Dow has this that we could use. We have this that Dow could use. We'll never be able to do a trillion different transactions. The way to do it is, let's put these two businesses together, take out the costs, reorganize things, combine things that are similar." The plan is now almost to completion. As you said, we're going to have three independent companies that all should be more streamlined, more focused, that don't have those little bits that just drag down the whole, if it goes right.

Sciple: Yes. "Streamlined" is definitely the buzzword management seems to be coming back to over and over again. You mentioned how it's been tough to own the whole basket of these companies. There's always a part that somebody can complain about. There's always something that puts a stink on the investment. Now that we can split these off and isolate them out, you can really realize the value of making them appealing to a broader swath of investors.