On Friday Dow Chemical said that it will split off its chlorine business and merge it with Olin Corp in a deal values at $5 billion.

The deal combined with company’s other divestitures would give Dow around $7 billion.

The merger involves Dow’s U.S. Gulf Coast chlor-alkali and vinyl, global chlorinated organics’ and epoxy businesses and expected to have revenue around $7 billion.

Dow will receive around $2 billion in cash and $2.2 billion in Olin Stock and the remaining 800 million in the assumptions of Dow’s pensions and other liabilities.

Olin will save at least $200 million a year as a result of increased scale.

After the merger Dow shareholders will hold about 50.5% of Olin’s share and while Olin will hold 49.5% of its shares.

Dow chemical has made this step due to the pressure from activist investor Daniel Loeb.

Dow shares surges over 3% after the announcement is made; now the market value of the company is almost $2 billion.

Olin shares also climbed by 20%, now the company’s worth is around $400 million.