An entity of activist investor Nelson Peltz is pressing for the break-up of DuPont, claiming the company’s stock valued is being destroyed by its management.
Investment funds managed by Trian Fund Management, L.P. have bought about $1.6 billion of DuPont, by some accounts about 3 percent of total shares.
After a dialogue with Trian, DuPont decided to spin off its Performance Chemicals business, but that was not enough the Peltz company.
“While we applaud the announced spin-off of Performance Chemicals, the Fresh Start initiative and the $5 billion share buyback authorization, we believe strongly that, by themselves, these moves are not enough to optimize shareholder value. We would have preferred to continue working privately with management and the Board, but it is now clear that the Board is not willing to hold management accountable for continuing underperformance and repeated failures to deliver promised revenue and earnings targets. Therefore, we can no longer be silent as DuPont continues to struggle to execute what we are convinced is a flawed business plan, especially as we have a solution that we believe could double the value of DuPont’s shares over the next three years,” Triad stated.
Trian demanded that DuPont spin off its faster growing agricultural business from its other business units.
DuPont issued the following statement:
“Our board of directors and management team have taken firm action over several years that has delivered 220 percent total shareholder return since year-end 2008, compared to 144 percent for the S&P 500 during the same period, by aggressively deploying our leading science across the company, strengthening and fine-tuning our portfolio, and through disciplined capital allocation.”
The statement continued. “The board and management team remain committed to executing on our strategic plan to drive growth and profitability. The recently announced first phase of our redesign initiative to drive down costs by $1 billion and embed greater efficiencies, together with the separation of Performance Chemicals and our $5 billion share repurchase program, reflect our board and management’s commitment to enhance value for all DuPont shareholders.”
The statement concluded: “DuPont welcomes open communications with shareholders and values input toward our common goal of enhancing shareholder value. We speak and meet with shareholders frequently, and while it is our policy not to comment on discussions with specific shareholders, we have had a constructive dialogue with Trian.”
Click on the link below to read the full letter:
