U.S. chemical giants DuPont and Dow Chemical agreed to merge in an all-stock deal valuing the combined company at $130 billion, with plans to eventually split into three.

The deal, which is likely to face intense regulatory scrutiny, allows the new company - to be called DowDuPont - to rejig assets based on the diverging fortunes of their businesses that make agriculture chemicals and plastics.

Dow and DuPont have been struggling to cope with falling demand for farm chemicals due to falling crop prices and a strong dollar, even as their plastics businesses have thrived thanks to low natural gas prices.

The companies said the proposed split would create businesses focused on agriculture, materials and specialty products. Dow and DuPont shareholders will each own about 50 percent of DowDuPont, excluding preferred shares.

DuPont Chief Executive Ed Breen will be CEO of DowDuPont, and Dow Chemical CEO Andrew Liveris will be executive chairman.

DuPont shares were down 4 percent at $71.50 in premarket trading on Friday, while Dows were up 1.5 percent at $55.72.

"This transaction is a game-changer for our industry and reflects the culmination of a vision we have had for more than a decade to bring together these two powerful innovation and material science leaders," Liveris said in a statement.

Dow Chemical shareholders will get one DowDuPont share for each Dow Chemical share held, while DuPont shareholders will get 1.282 shares in DowDuPont for each DuPont share they own.

The companies said the split would "occur as soon as feasible" and would likely happen 18-24 months after the deal closes, which is expected in the second half of 2016.

The combination will help the companies save about $3 billion in costs in the first two years, with the possibility of saving another $1 billion, Dow and DuPont said.

The biggest of the three new companies by revenue would be a material science company, which would cater to the packaging, transportation and infrastructure industries.

The combined revenue for the materials business was about $51 billion in 2014, on an adjusted basis.

The companies said a new specialty products company would focus on electronics. The combined adjusted revenue of that business was about $13 billion in 2014.

The third business, selling seed and crop protection chemicals, generated adjusted revenue of about $19 billion.

DowDuPonts board is expected to have 16 members, with each company contributing eight directors, the companies said.

In a separate announcement, Dow Chemical said it would buy the remaining stake in its 50-50 joint venture with Corning, the supplier of Gorilla Glass for iPhones.

The transaction is expected to yield more than $1 billion in additional annual EBITDA at full run-rate synergies, Dow Chemical said.