The top story in 2015 is the travails of the 200-year-old former gunpowder mill that became the essence of the modern corporation that seems likely to be swallowed up and spun off.
That outcome became apparent when CEO Ed Breen boldly announced late in the year that 1,700 out of the 7,000 Delaware employees will lose their jobs in January. That was far more than the state’s share of the 10 percent job cut figure revealed earlier.
One consolation prize was the decision to base one of three businesses that will emerge out of a merger of DuPont and Dow in Delaware.
The size of the cuts could become a campaign issue in the 2016 elections. Political leaders were threading the needle between making a case for the company keeping more operations in the state and the growing belief that the board has turned the company over to quick buck artists on Wall Street.
The story begins with activist investor Nelson Peltz who stepped up pressure on the company to split off businesses by launching a proxy battle with management headed by Ellen Kullman.
To make a long story short, Peltz lost the battle and won the war. In an effort to win the proxy battle, Chair and CEO Ellen Kullman added two veteran CEOs, including Edward Breen, who had split up the Tyco conglomerate into a number of companies.
Under Kullman, DuPont set the stage for spinning off some of its longtime businesses into a publicly traded company known as Chemours. Chemours is now saddled with much of DuPont’s environmental liabilities and a dividend that was quickly slashed as prices for the former DuPont cash cow, titanium dioxide, continued to slide
But the victory was short-lived. DuPont was facing tough conditions in its agriculture business, thanks to a strong U.S. dollar and a steep recession in Brazil.
Kullman suddenly retired (by many accounts she was ousted) and Breen was appointed interim and later permanent CEO.
Breen put in seven-day weeks in speeding up a restructuring process that had begun under Kullman, with an eye toward mergers that would build market share in agriculture,.
That led to what a New York Times, described as a feat of financial engineering that made White Paper lover Peltz proud, a planned merger with long-time rival Dow Chemical and a future split up of the combined companies into three entities.
On paper, the split up makes sense, if you discount the fact that DuPont somehow managed to survive wars, depressions and changing markets for 200 years without such draconian steps.
But the pressures of pension funds, hedge funds and other entities looking at short-term gains won out.
Not that DuPont was without issues. A massive R&D program had not produced a blockbuster since the invention of Kevlar in decades.
Kullman had also set the stage for the current environment by insisting that capital go into businesses earning higher returns. It made sense on paper but perhaps ignored technologies lurking in labs.
Many found it hard to figure how the merger and split up, which could take two years or more to complete, will produce long-term benefits. As the Times piece noted, successes have been rare in this area.
Granted Breen has a solid track record, but did his experience at Tyco give him a love for slicing and dicing at the expense of a long-term view that is part of most great companies.
And will more patient rivals be able to benefit from the lengthy merger and split up?
And one more thing to keep in mind. Breen walked away from Tyco with $150 million. Could a bigger paycheck be in the offing when he does the same after Dow and DuPont merge?
Well summed up, Interesting that banks can be to big to die, but not DuPont.