By Greg Roumeliotis

Dec 8 (Reuters) - Dow Chemical Co (DOW.N) and DuPont (DD.N) are in talks to merge, creating a chemicals giant with a market value of more than $120 billion that could then break up into different businesses, people familiar with the matter said on Tuesday.

A deal, which would face regulatory approval in several countries, would allow the two U.S. companies to rejig their assets based on their diverging fortunes. Their plastics and specialty chemical businesses have benefited from lower energy costs, while their agrochemicals divisions have struggled to cope with weak demand for crop protection products.

Following what would be structured as a merger of equals, the combined company could split into material sciences, specialty products and agrochemicals, the people said, cautioning that the plans have not been finalized.

Dow's Chief Executive, Andrew Liveris, and DuPont Chief Executive Edward Breen would have the two top jobs in the combined company, one of the people said. An agreement could be reached in the coming days, that person added.

Dow and DuPont declined to comment. The Wall Street Journal first reported on the merger talks earlier on Tuesday.

As of Tuesday's trading close, Dow had a market valuation of $58.97 billion, while DuPont (DD.N) was valued at $58.37 billion.

DuPont, under Breen, who took over as CEO last month, had already been in talks with rivals, including Dow, about exploring options about its agriculture business.

Dow had also been reviewing all options for its farm chemicals and seeds unit, which has reported falling sales for nearly a year.

In August, the world's largest seed company, Monsanto (MON.N) , abandoned a $45 billion bid for rival Syngenta (SYNN.VX) as declining grain prices and farm income led to the major players in the farm chemicals and seeds business becoming the subject of consolidation talks.