DUPONT plans to split into three publicly traded companies, joining a list of industrial conglomerates seeking to boost returns by breaking into smaller, more focused businesses.
The company will separate its electronics and water units through tax-free transactions, DuPont announced on Wednesday (May 22). The remaining operations will be focused on industries such as biopharma and medical devices, with products including Tyvek and Kevlar.
Chief executive officer Ed Breen, who returned to the role in 2020, will step down on Jun 1, the company said. He will retain the role of executive chairman of the remaining company while chief financial officer Lori Koch assumes the CEO post.
Splitting apart will give each new company “greater flexibility to pursue their own focused growth strategies, including portfolio enhancing M&A”, Breen said.
The breakup continues DuPont’s lengthy history of dealmaking and portfolio reshaping. About a decade ago, the company agreed to merge with Dow Chemical and subsequently spun off some businesses. DuPont has also been exploring divestitures recently and last year agreed to sell a controlling stake in Delrin for US$1.8 billion.
DuPont shares rose 4.8 per cent in extended trading at 5.04 pm in New York. The stock had gained about 2 per cent this year to Wednesday’s close, giving the company a market value of about US$33 billion.
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Breen earlier engineered multiple breakups while CEO of Tyco International: a 2007 deal that created TE Connectivity and Covidien, and a later one to divide the remaining company into three businesses.
The announcement follows a parade of corporate icons that have broken up in recent years in bids to create value for shareholders such as Johnson & Johnson, United Technologies and Danaher.
General Electric (GE) became the latest example in April when it spun off its energy-related businesses following the early 2023 separation of its healthcare equipment unit. Shares of GE, which is now principally a maker of jet engines, have soared roughly 58 per cent this year to Wednesday’s close.
DuPont expects to complete the separations within 18 to 24 months, subject to shareholder vote and regulatory approvals. The company on Wednesday also reaffirmed its second-quarter outlook and full-year financial guidance.
Centerview Partners and Goldman Sachs are serving as DuPont’s financial advisers, while Skadden Arps Slate Meagher & Flom is its legal counsel. BLOOMBERG
