WILMINGTON, Deleware (From The New York Times) -- Dow Chemical and DuPont, two of the biggest and oldest companies in the American chemical industry, are in talks to merge in what would be one of the largest transactions in a year full of huge deals, people briefed on the matter said on Tuesday.

Under the terms being discussed, a merger of the two companies -- each with a market value of roughly $60 billion -- could eventually be followed by a breakup of the company, two of these people said.

Combined, the two companies would be the second-biggest chemical company in the world, in terms of revenue, after BASF of Germany, with more than $92 billion in annual sales. The next step being discussed would be to break up the merged company into three businesses: agricultural chemicals, specialty products, and materials, like plastics.

An announcement could come soon, these people added, while cautioning that talks were incomplete and could still collapse.

Dow and DuPont -- the former founded in 1897 as a bleach producer in Michigan, the latter born in 1802 in Delaware as a gunpowder manufacturer -- are among the best-known names in the chemicals business. Dow has produced a slew of plastics and agricultural chemicals, while DuPont claims innovations such as Kevlar and Teflon.

Yet each company has come under attack from activist investors unhappy with its financial performance. Last year, Dow settled a brief but bitter dispute with Daniel S. Loeb, the billionaire who runs the hedge fund Third Point, by adding four independent directors.

And this May, DuPont -- formally E.I. du Pont de Nemours & Company -- successfully fended off a board challenge by Nelson Peltz, dealing the billionaire financier his first loss since he opened his current firm, Trian Fund Management, a decade ago.

In both cases, Mr. Loeb and Mr. Peltz have argued that the chemical makers they were targeting suffered from corporate bloat and missed financial earnings targets. The two companies argued that they were taking steps to trim excess costs and improve their operations, as well as buy back shares and increase stock dividends.

Dow Chemicals' portfolio is split into two groups: specialty and basic chemicals. The company has been focusing more on specialty chemicals, which carry higher prices, whereas basic chemicals are more commoditized. Dow is also more exposed to the volatility of the energy market.

Representatives from Dow and DuPont declined to comment.

Should the two sides agree on a deal, it would be yet another blockbuster merger in what has already proved to be one of the most fruitful years for deal makers. More than $4 trillion worth of deals have been since struck the beginning of this year, surpassing 2007 as the busiest year for acquisitions.

Among the biggest deals announced this year are Pfizer's $150 billion acquisition of the Botox maker Allergan, Anheuser-Busch InBev's $106 billion union with its fellow beer giant SABMiller, and Charter Communications' $55 billion takeover of Time Warner Cable.

In weighing a breakup of the combined Dow and DuPont, the two companies are following a path that both Pfizer and Anheuser-Busch InBev have embarked on. Pfizer is leaning toward splitting itself up into a faster-growing drug manufacturer and a slower-growing pharmaceuticals business, while Anheuser-Busch InBev has already agreed to sell off big swaths of its and SABMiller's combined beer brands.

Edward D. Breen, who recently became DuPont's chief executive, replacing Ellen Kullman, is no stranger to corporate breakups. As chief executive of Tyco, he oversaw its split into three separate companies, including the home alarm unit ADT, a valve-and-pipe unit, and a commercial fire and security business.