The chemical industry and a number of agricultural producers are in talks to merge to form one entity, a deal that would create one of the biggest consolidation in the country.
The deals would bring together the largest producers of nitrogen and phosphorous fertilizers, and could lead to more than 1,000 new chemical plants, the companies said Thursday in a joint statement.
Delta, which has been trying to make its chemical business more profitable, would own more than a third of the chemical company, according to the statement.
The companies have not set a price.
Delta has said it plans to create the combined company with an ownership stake of more than 80 percent, but the companies could negotiate lower.
The proposed merger would be a big deal for farmers in northern Idaho and the southwest, which have been under pressure to diversify their food supply, said Michael Hickey, president of the Northwest Potato Growers Association.
Agriculture is a critical part of the Idaho economy.
It supports about half of the state’s $1.6 billion in agriculture and food-producing jobs.
Farmers say they are struggling to find jobs in a tough economy, especially in Idaho, where unemployment remains stubbornly high.
Delta also said in its announcement that it will acquire its remaining stake in its agricultural business, but it is not clear what will replace it.
Delta’s new acquisition would be the largest chemical company in the United States, said David Lassiter, president and CEO of the Association of American Chemical Manufacturers, an industry group.
The proposed merger could be the biggest in the industry, he said.
Delta will be a major player in the food-processing sector, with an annual sales of $4 billion, according the company.
The company’s business has grown by nearly 2,000 percent since 2000, according data compiled by Bloomberg.
The merger would make Delta one of America’s largest chemical companies.
The combined company would have more than half of its chemicals in the U.S., the statement said.
It would be owned by the two companies and have nearly 50 percent of the nation’s chemical market.
Delta is looking to diversification, Lassit said, and the company will look for opportunities to improve its margins, as well as increase its supply chain.
“It’s very much an extension of Delta’s efforts to become a diversified business,” Lassitt said.
“There’s going to be more of a focus on that.
We’re looking at that all the time.”
The announcement comes as the two chemical companies are embroiled in a bitter antitrust case in the Federal Trade Commission, where the FTC alleges Delta and other large food processors are trying to unfairly price their products.
Delta and several of its competitors have said they want to offer consumers lower prices for their products and increase the efficiency of their processes.
Delta has argued that the price competition is not harming consumers, and that it should be allowed to charge the lowest prices.
The FTC has accused the two groups of conspiring to market their products in a way that favors their businesses, with the goal of driving down prices.