NEW YORK (The Deal) -- Activist Nelson Peltz has called on E. I. du Pont de Nemours and Co. (DD) to split into two separate entities, saying the steps the chemicals firm has taken to increase shareholder value have not gone far enough.
Peltz, who via his Trian Fund Management owns a $1.6 billion stake in DuPont, in a letter to the Wilmington, Del.-based company's board said DuPont should split off its high-growth units, including its agriculture arm, from its slower-growth strong cash flow operations.
The investor first disclosed a stake in DuPont last year, and the company has taken a number of steps in recent quarters designed to boost value. DuPont is in the process of divesting its performance chemical business and authorized a $5 billion share repurchase, and is seeking out other ways to shed costs and streamline operations.
Peltz in his letter to the board said that "while we applaud" the announced moves, "we believe strongly that, by themselves, these moves are not enough to optimize shareholder value." He said that though he would have preferred to work privately with management, "it is now clear that the board is not willing to hold management accountable for continuing underperformance and repeated failures to deliver promised revenue and earnings targets."
The investor called DuPont's current plan, which would not include a split, "flawed," and argued that his split could double the value of company shares over the next three years. He hinted at a potential proxy fight at DuPont, saying Trian plans to meet with shareholders who "will decide the right path forward for DuPont."