Afternoon all,
News of a $4.6 billion write-down on the value of the combined DowDuPont agriculture operation was not warmly greeted on Wall Street.
Shares of DowDuPont hit a 52-week low on the news and it will be interesting to see if the share price snaps back this week.
News of the write-down or the response from Wall Street should not come as a big surprise given current conditions in the volatile business. Moreover, stock prices are at frothy levels and bad news can produce an overreaction.
Agriculture is clearly seeing tougher conditions that include low commodity prices, tariffs and growing grain inventories.
The DowDuPont agriculture business will be spun off next year as Corteva Agriscience. Corteva is already using its new name and has a top management team in place as it prepares for the separation.
In announcing the write-down, DowDuPont took pains to reassure investors that Corteva will come to the table with many strengths in a wide range of areas ranging from seeds to crop protection.
Meanwhile, the company will be meeting with the investment community to make its case.
The question is how Corteva will fare in an environment with rivals that have also bulked up with acquisitions.
The ag giants will all be working to meld distinct corporate cultures while dealing with volatile markets. Meanwhile, farmers are worried about having fewer choices in the marketplace.
Corteva will be headquartered in Delaware, although most of its operations will remain outside the state, with major employment centers in Indiana and Iowa.
Enjoy your Monday and read on. – Doug Rainey, publisher.
