Trian Fund Partners, in touting its $1.9 billion investment in DuPont stock, made a case for electing its slate of partners in a letter to shareholders of the company that was released on Wednesday.
Claiming the firm headed by billionaire hedge fund manager Nelson Peltz, has been patient in its approach, Trian stated that its slate of partners would improve the performance of the company.
Peltz’s stake is dwarfed by the $68 billion stock market value of DuPont. However, his claim that Trian’s investment has led to decisions that boosted the stock price might resonate with some institutional investors who hold the bulk of the shares in the company.
Other investors have said DuPont is a well-managed company and that its stock price would have risen regardless of Peltz’s actions and worry that the ruckus could negatively affect the company’s blue chip debt rating.
DuPont named two CEOs with turnaround experience to the board after spurning Peltz’s demand that he and three other nominees be named to the board. A letter from Kullman indicated that a member of the Trian slate appeared to be qualified for the board, and claimed that Peltz would not entertain that possibility in a meeting in Chicago.
Trian also took a shot at CEO Ellen Kullman selling stock in the company, although corporate governance experts say such triggers are often done automatically when shares reach a certain price.
The company also seemed to back away from its demands for splitting up DuPont as a way to add value for shareholders.
“Trian does not see this election as a referendum on separating the businesses, but rather a referendum on DuPont’s financial performance. If elected to the Board, the Trian nominees will seek to work collaboratively with the other Board members to determine whether value can be optimized in the current structure or through a separation,” the letter stated.
“It is also worth noting that the CEO has sold approximately 54% of her shares since Trian first invested in DuPont in March 2013, a development one significant DuPont stockholder recently told the Wall Street Journal is “alarming”.2 We believe stockholders approve share awards to management in order to assure an alignment of interest, not for management to sell prematurely. Does the CEO selling stock betray a lack of confidence in her own plans for the Company,” the Trian letter asked.
Trian also pointed to the recent sale of DuPont’s paint and coating business as an example of bad management. Stock in that company, now known as Axalta, is not valued at more than the price DuPont received in selling the company to a private equity firm. That firm later sold stock to recoup its investment. Click on the link below for a press release and link to the letter.
February-11-Press-Release-for-TrianPartners
Click here for past stories on the DuPont-Peltz battle.
