Good afternoon,
DowDuPont is wrapping up a three-way separation this week.
DuPont and Corteva (the combined Dow-DuPont agricultural operation with a Latin-sounding name that reflects its worldwide focus) are splitting off into two publicly traded companies. Earlier in the spring, a slimmed down Dow reemerged as a publicly traded company.
Driving what the Wall Street Journal described as the DowDuPont “spin cycle” was Corteva, which has been viewed as a strong player in a rapidly consolidating industry that includes seed and crop protection businesses.
The spinoffs were described by one analyst as the most complex in corporate history, Barron’s (paywall) reported.
Corteva is now trading on the New York stock exchange as the transition gets underway and the results have not been pretty.
Shareholders of DowDuPont who opted to hold on to their holdings have a lot to consider. The spinoffs occurred as the chemical and agribusiness sectors have run into headwinds that include slowing growth in China and a stock market off its highs.
Corteva has the most potential but has taken a beating from bad weather that has stymied planting for crops in the nation’s farm belt.
DuPont is still in a state of flux, with the company planning to sell off about 10 percent of its diverse portfolio of businesses.
One cloud over both DuPont and CCorteva comes from widening trade wars. The most recent area of concern was the tariff announcement by the Trump Administration in response to what it views as Mexico’s tepid response to the surge of asylum seekers from central America.
Barron’s notes that all the moving parts from the spinoffs make analyzing Corteva and DuPont’s prospects difficult to assess.
Barron’s advice – Take time to see how the companies’ stock prices perform post-spinoff. Corteva, in particular, could become a buying opportunity – if shareholders throw up their hands at the complexities of owning two or three companies and sell.
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Enjoy this beautiful humidity-free day. – Doug Rainey, chief content officer.
