DuPont Plans Separation into Three Companies

TUESDAY, JUNE 11, 2024


Technology-based materials and solutions manufacturer DuPont has revealed its plan to separate into three independent, publicly traded companies. Under the plan, New DuPont will reportedly continue to operate as an industrial company, with new Electronics and Water businesses.

As independent entities, the company anticipates these businesses will gain increased focus and agility in their respective industries, with strong balance sheets, financial profiles and growth opportunities.

According to DuPont, each standalone business is expected to benefit from:

  • An ability to tailor capital allocation strategies to pursue differential strategic growth objectives;
  • Enhanced strategic flexibility to pursue portfolio enhancing M&A;
  • Compelling investment profiles appealing to different investor bases; and
  • Distinct boards of directors and management teams comprised of world-class leaders with track records of driving value creation in each specific industry.

“This is an extraordinary opportunity to deliver long-term, sustainable shareholder value through the creation of three strong, industry-leading companies,” said Ed Breen, DuPont Executive Chairman and Chief Executive Officer.

“The three-way separation will unlock incremental value for shareholders and customers and also create new opportunities for employees. Critically, each company will have greater flexibility to pursue their own focused growth strategies, including portfolio enhancing M&A.”

New Businesses Overview

New DuPont is described as a diversified industrial company powered by materials science and application engineering expertise, innovation and manufacturing capabilities. This will include brands such as Tyvek, Kevlar and Nomex; markets covered by New DuPont will involve healthcare end-markets, electric vehicles, safety, construction, aerospace and other industrial-based end-markets.

This company will reportedly be comprised of the existing businesses within the Water & Protection segment (excluding Water Solutions), the majority of businesses within Industrial Solutions (including healthcare) and the retained businesses reported in Corporate (including adhesives).

These businesses generated net sales of approximately $6.6 billion and operating EBITDA margin of approximately 24% in 2023, DuPont reports.

Electronics will focus on providing differentiated electronics materials including consumables used in semiconductor chip manufacturing and advanced electronic materials. It will be comprised of the existing Semiconductor Technologies and Interconnect Solutions lines of business, as well as the electronics-related product lines from Industrial Solutions.

According to DuPont, these businesses generated net sales of approximately $4.0 billion and operating EBITDA margin of approximately 29% in 2023.

Finally, Water’s portfolio will consist of water filtration and purification solutions with technologies in reverse osmosis, ion exchange and ultrafiltration. This will provide components and systems to generate clean water across a variety of market segments including industrial water and energy, life sciences and specialties, municipal and desalination, and residential and commercial.

Water will reportedly be comprised of DuPont’s current Water Solutions line of business, which generated net sales of approximately $1.5 billion and operating EBITDA margin of approximately 24% in 2023.

DuPont says that it expects to execute the proposed separates in a way that will be tax-free for DuPont shareholders for U.S. federal income tax purposes. The separations are also anticipated to be completed within 18 to 24 months.

However, the separation transactions will not require a shareholder vote, but are subject to satisfaction of customary conditions such as final approval by DuPont’s Board of Directors, receipt of tax opinion from counsel, the filing and effectiveness of Form 10 registration statements with the U.S. Securities and Exchange Commission, applicable regulatory approvals and satisfactory completion of financing.

Centerview Partners LLC and Goldman Sachs & Co. LLC are serving as DuPont’s financial advisors. Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel.

Leadership Changes

That same day, DuPont announced that its Board of Directors selected its chief financial officer Lori D. Koch to succeed Edward D. Breen as the company’s Chief Executive Officer. The change was effective June 1.

Breen transitioned from the role of CEO to full-time Executive Chairman of the Board of Directors. Additionally, Koch is reportedly expected to join the Board of Directors at its next regularly scheduled meeting in June.

Antonella B. Franzen, chief financial officer of DuPont’s Water and Protection segment, was also appointed DuPont’s Chief Financial Officer.

“As Executive Chairman and CEO of DuPont, Ed Breen has guided the company through a significant chapter of transformation and value creation. We are grateful for his leadership,” said Alexander M. Cutler, DuPont’s Lead Independent Director.

“The Board believes that Lori Koch is an ideal leader for the next phase of the company’s journey and is pleased that Ed will continue serving as a trusted partner to her.”

“I am delighted that Lori will serve as DuPont's next CEO. She has had a tremendous impact as CFO, helping us navigate the unprecedented challenges of the past few years while positioning the company for long-term success. I’m confident that her leadership capability and vision will further accelerate DuPont’s transformation and growth,” said Breen.

“Additionally, Antonella will be terrific as DuPont’s next CFO. I’ve known her for many years, and she’ll be a strong partner to Lori in delivering financial excellence.”

Following completion of the separations, Koch and Franzen will remain in their respective positions for New DuPont. However, specifics around additional executive leadership and Board of Director appointments are anticipated to be announced in advance of the respective separations.

   

Tagged categories: Asia Pacific; Business management; Business matters; Business operations; DuPont; EMEA (Europe, Middle East and Africa); Industry News; Latin America; North America; Personnel; Personnel changes; Program/Project Management; Z-Continents

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