NEW YORK (TheStreet) -- The Dow Jones Industrial Average is on a diet.
In announcing a $4.9 billion sale of its automotive coating unit to private equity firm Carlyle Group (CG) -- one of the biggest private equity deals of 2012 -- DuPont (DD) joins a growing list of Dow Jones Industrial Average giants who are undergoing asset sales and spinoffs.
Now DuPont joins its slimming down Dow brethren with the sale of its performance coatings unit, which is expected to draw in $4 billion in 2012 revenue, roughly 10% of overall sales at the industrial giant.The Carlyle Group is buying the unit, which is a supplier of vehicle and industrial coatings, in a bet on emerging market auto sales and the unit's established brands and technologies. "DuPont Performance Coatings is a technology innovator and we look forward to building on its strong market presence to accelerate growth in emerging markets, particularly in China and Brazil," said Gregor Böhm, a managing director and co-head of Carlyle's Europe Buyout team, in a statement. The deal will be funded by the firm's Carlyle Partners V and Carlyle Europe Partners III funds. In 2012 results, DuPont said it will report performance coating division earnings as discontinued operations. It expects 2012 earnings from discontinued operations to be in the range of 41 cents to 47 cents per share, according to a press release. DuPont also left its full year earnings guidance unchanged on Thursday. Wilmington, Del.-based DuPont said it is selling its coating unit as part of a focus on high-growth, high profit-margin operations in agriculture, materials and biotechnology. "We have determined that DPC's full growth potential would be best realized outside DuPont and through the sale to Carlyle," DuPont chief executive Ellen Kullman said in a statement. The Dow diet of spinoffs and asset sales will be a key driver of overall M&A and IPO activity in what has been a lackluster year for deals. ConocoPhillips spun its refining unit, Phillips 66 (PSX), in a May initial public offering that now stands at a market cap of over $26 billion. Meanwhile, Pfizer's $11.85 billion sale of its baby nutrition unit to Nestle and its proposed spinoff of its animal health unit through an IPO are among the largest deals of 2012. Kraft and Pfizer are expected to IPO units in coming quarters. For Carlyle Group, its acquisition of DuPont's performance coatings unit adds to previous bets tied to the automotive sector. The private equity giant also has investments in Allison Transmission (ALSN) and Hertz (HTZ), by way of previous buyouts. Separately, in a Thursday filing with the Securities and Exchange Commission, Carlyle Group said that executives of the private equity fund have contributed $700 million to a new flagship buyout fund that it hopes will swell to $10 billion, according to Bloomberg. As the fund gobbles up assets, don't be surprised if more Dow dishes are brought to the deals table. -- Written by Antoine Gara in New York
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV