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DuPont Coatings Unit Sold for $4.9B

Thursday, August 30, 2012

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DuPont Performance Coatings, one of the world’s largest automotive coatings suppliers, has reached the finish line.

Photos: DuPont

DuPont’s Performance Coatings includes one of the world’s largest automotive paint units as well as aviation, industrial and commercial finishes.

The company, also a global industrial coatings supplier, will be sold to The Carlyle Group, a global asset management company, for $4.9 billion in cash, the companies announced Thursday (Aug. 30).

DuPont Performance Coatings consists of DuPont Industrial Coatings, DuPont Aviation Finishes, DuPont Commercial Finishes, DuPont Refinish, Standox, Spies Hecker, and Nason Finishes. The business has more than 11,000 employees and expects more than $4 billion in 2012.

Managing $156 billion in assets, Carlyle’s core industries include aerospace and defense, transportation, energy and power, and infrastructure. The DPC acquisition will be funded with equity from Carlyle Partners V and Carlyle Europe Partners III.

The deal is expected to close in the first quarter of 2013, pending approvals.

Long-Awaited Sale

The impending sale of DuPont Performance Coatings has been something of an open secret for months.

DuPont CEO Ellen Kullman told reporters last December that the poorly performing business would get “a chance” to improve before DuPont looked at “alternatives, whatever that means.”

The coatings unit has not performed well, compared with other DuPont businesses, including health care and agriculture.

Since then, a variety of prospective suitors for the company have been widely reported. DuPont did not confirm any of the reports but also did not bother to refute them.

DuPont Performance Coatings was formed in March 1999 by the merger of Herberts GmbH and DuPont Automotive Finishes. The unit sells its coatings to auto producers like Ford and General Motors as well as to Maaco and other auto refinishers.

Currently, DPC has the worst outlook in DuPont’s increasingly science- and biotech-oriented portfolio, where the agriculture, industrial biosciences, and nutrition and health segments have been the recent standouts.

‘World-Class Products’

In an upbeat statement Thursday, Kullman said the sale followed “a careful review” of DPC’s “growth potential.”

“DuPont Performance Coatings is a leader in the automotive and industrial coatings sectors, with world-class products and customer service,” the statement said. “The business continues to grow and deliver solid results.

“After a careful review, however, we have determined that DPC’s full growth potential would be best realized outside DuPont and through the sale to Carlyle.

“This transaction is consistent with our vision to be the world’s most dynamic science company and long-term strategy of driving competitive advantages in agriculture and nutrition, advanced materials and biotechnology, which represent high-growth, high-margin opportunities.”

‘Attractive Market Positions’

Greg Ledford, Carlyle Managing Director and Head of the Industrial and Transportation team, said DPC offered “attractive market positions, next-generation technology and established brands.”

He added, “Through targeted investments, we will support DPC’s product development and growth objectives as it transitions to a stand-alone company. We look forward to working with management to fully realize DPC’s great potential.”

Gregor Böhm, Managing Director and co-head of Carlyle’s Europe Buyout team, called DPC “a technology innovator” and said Carlyle would focus on building the coatings company’s presence “in emerging markets, particularly in China and Brazil.”

Kullman said DuPont remained committed to serving the auto industry and, after the sale, would generate more than $3 billion in sales of advanced materials to the industry.

“We will continue to work closely with automotive customers to apply our science-powered innovations related to light weighting of vehicles, revolutionary and environmentally friendly refrigerants, biobased seat fabrics and headliners, and next-generation biofuels,” Kullman said.