This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

The Deal: DuPont Plans Performance Chemicals Unit Spinoff

 
NEW YORK (The Deal) -- DuPont (DD - Get Report) said late Thursday, Oct. 24, it intends to spin off its performance chemicals unit to shareholders, joining the push by chemicals giants to shed lower-growth commodity products in favor of more lucrative specialty chemicals.
 
Wilmington, Del.-based DuPont said that its board has authorized management to spin the performance chemicals segment, which includes titanium technologies and its fluoroproducts businesses, into a new, publicly-traded company.
 
Post separation, which is expected to take about 18 months, 100% of the new company would be owned by shareholders.
 
The company said that the unit to be separated generated operating earnings of $1.8 billion on sales of $7 billion last year, but it has been plagued by high raw material costs. DuPont said post-deal its shareholders would own stock of both a high-growth specialty chemicals firm and the spinoff, which will have strong cash flow and powerful market share even if growth may lag.
 
"This separation will advance the transformation of DuPont and result in two strong, highly competitive companies," DuPont Chair and CEO Ellen Kullman said in a statement. "After separation, DuPont will have the optimum portfolio and will benefit from more consistent earnings growth and lower volatility, enhancing our ability to deliver more sustained growth and invest in future opportunities."
 
Kullman said she expects the two companies post-separation to pay dividends that combined would equal DuPont's dividend at the time of the split. Post-split DuPont will be focused on agriculture, nutrition, advanced materials and bio-based industrial products.
 
The announcement came hours after DuPont rival Dow Chemical (DOW) more than doubled its divestiture goal to $3 billion in asset sales by the end of 2014. DuPont and Dow have both in recent years tried to shift their businesses away from petroleum-based products and base chemicals, with Dow acquiring Rohm and Haas for $18.8 billion in 2008 and shedding assets including Morton Salt and various catalyst and polypropylene businesses in the years since.
 
DuPont, meanwhile, has done deals including its $6.3 billion purchase of Danish food enzyme maker Danisco in 2011, while marking its performance coatings segment for sale.
 
But not everyone in the industry is focused on divestitures. Kurt Bock, CEO of German chemicals giant BASF, told reporters Friday that his company is not planning any large divestitures or spinoffs.
 
Evercore and Goldman Sachs Group Inc. are serving as strategic advisers on the separation. A Skadden, Arps, Slate, Meagher & Flom LLP team including partners Brandon Van Dyke, Lou Kling, David Rievman and Regina Olshan is providing legal counsel.

Written by Lou Whiteman

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
DD $71.65 0.00%
AAPL $123.25 0.00%
FB $83.30 0.00%
GOOG $548.34 0.00%
TSLA $185.00 0.00%

Markets

DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs