DuPont will separate into three publicly traded companies as CEO Edward Breen steps aside as CEO and becomes chairman.
Under the plan, DuPont would execute the proposed separations of its Electronics and Water businesses to its shareholders with New DuPont continuing as an industrial company after completing the separations. DuPont is based near Wilmington.
“As independent entities, both Electronics and Water will benefit from increased focus and agility in their respective industries. At separation, each of the three companies will have strong balance sheets, attractive financial profiles and compelling growth opportunities,” a release stated.
“This is an extraordinary opportunity to deliver long-term, sustainable shareholder value through the creation of three strong, industry-leading companies,” said Breen. “Critically, each company will have greater flexibility to pursue their own focused growth strategies, including portfolio enhancing M&A (mergers and acquisitions.”
It follows the trend of old-line industrial companies, like DuPont and GE, spinning off and selling businesses in an effort to boost share prices.
Breen employed a similar strategy at Tyco International a sprawling conglomerate plagued by scandals under previous management. Breen restructured and sold off companies over a long period. Tyco no longer exists after its ADT security operations were sold.
A New DuPont will be an industrial company with well-known brands such as Tyvek, Kevlar, and Nomex.
According to a release “New DuPont will have a strong presence in fast-growing healthcare end-markets including applications for biopharma consumables, medical devices, and medical packaging. The company will also be a leading provider of key technologies enabling advanced mobility particularly within electric vehicles. Finally, New DuPont will remain a provider of advanced solutions serving safety, construction, aerospace and other industrial-based end-markets.”
New DuPont will be comprised of the existing businesses within the Water & Protection segment (excluding Water Solutions), the majority of businesses within Industrial Solutions (including healthcare), and the retained businesses reported in Corporate (including adhesives).
The New DuPont businesses generated net sales of about $6.6 billion.
Electronics
Electronics will be a global provider of differentiated electronics materials, including key consumables used in semiconductor chip manufacturing, as well as advanced electronic materials enabling reliable signal integrity, power management, and thermal management.
The release said the company will be positioned to benefit from growth in the semiconductor industry.
These businesses generated net sales of approximately $4 billion.
Electronics will focus on innovation-based growth. With robust cash flow generation, Electronics will be well positioned to pursue ongoing organic growth initiatives and have flexibility to pursue inorganic growth opportunities.
Water
The business offers a portfolio of water filtration and purification solutions, including reverse osmosis, ion exchange, and ultrafiltration technologies. Its markets include industrial water and energy, life sciences and specialties, municipal and desalination, and residential and commercial. Sales total about $1.5 billion.
DuPont expects to structure the proposed separations of Electronics and Water in a way that will be tax-free for DuPont shareholders for U.S. federal income tax purposes.
DuPont expects to complete the separations within 18 to 24 months. The separation transactions will not require a shareholder vote but require final approval by DuPont’s Board of Directors and other steps.
DuPont announced the following leadership appointments, effective June 1.
- Lori Koch, current Chief Financial Officer is appointed CEO succeeding Breen who will retain his role of Executive Chairman.
- Antonella Franzen, current Chief Financial Officer of DuPont’s Water & Protection segment, is appointed Chief Financial Officer.
Following completion of the separations, Koch and A Franzen will remain in their respective positions for New DuPont.
The planned split comes after DuPont and Dow briefly merged and later spun out into Dow and DuPont, with the agribusiness segment of the two companies becoming Corteva. Breen stepped down as DuPont CEO but returned after the company posted disappointing financial results.
Previous DuPont CEOs sold off spun off pharmactucal, medical, auto paint and other operations. Its legacy chemical, refrigerant and titanium operations became Wilmington-based Chemours.
DuPont was once one of the world’s largest companies. It has since shrunk into a company with about $12 billion in annual sales. Revenues in 2011 were nearly $60 billion.
