As its print and packaging divisions prepare for drupa, multi-national giant DuPont has announced a plan to separate into three distinct, publicly traded companies.
Under the plan, DuPont would execute the proposed separations of its Electronics and Water businesses in a tax-free manner to its shareholders with New DuPont continuing as a premier diversified industrial company following completion of the separations.
DuPont says that, as independent entities, both Electronics and Water will benefit from increased focus and agility in their respective industries. It adds that, at separation, each of the three companies will have strong balance sheets, attractive financial profiles and compelling growth opportunities.
The company contends that, as leading standalone companies, each 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 mergers and acquisitions.
Compelling investment profiles appealing to different investor bases.
Distinct boards of directors and management teams comprised of world-class leaders with track records of driving value creation in each specific industry.
Ed Breen, executive chairman and chief executive officer at DuPont, says, “This is an extraordinary opportunity to deliver long-term, sustainable shareholder value through the creation of three strong, industry-leading companies.
“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 mergers and acquisitions.”
Diversified Industrial Company – New DuPont
New DuPont will be a premier diversified industrial company powered by deep materials science and application engineering expertise, industry-leading innovation, top-tier manufacturing capabilities, and brands such as Tyvek, Kevlar and Nomex. New DuPont will have a strong presence in fast-growing healthcare end-markets including applications for biopharma consumables, medical devices, and medical packaging. The company will also be a leading provider of key technologies enabling advanced mobility particularly within electric vehicles. Finally, New DuPont will remain a provider of advanced solutions serving safety, construction, aerospace and other industrial-based end-markets.
New DuPont comprised 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.
The company expects New DuPont to continue to deliver strong margins, generate robust cash flow and will have a balanced financial policy similar to the current DuPont, including the ability to invest in growth opportunities.
Electronics
DuPont says Electronics will be a leading global provider of differentiated electronics materials including key consumables used in semiconductor chip manufacturing, as well as advanced electronic materials enabling reliable signal integrity, power management and thermal management. The company will be well positioned to capture growth in the semiconductor industry, driven by high-performance computing demands from AI, high speed connectivity, smart and autonomous vehicles and the Internet of Things, among other mega-trend growth drivers.
Electronics comprised the existing Semiconductor Technologies and Interconnect Solutions lines of business, as well as the electronics-related product lines from Industrial Solutions. It will focus on innovation-based growth. With robust cash flow generation, Electronics will be well positioned to pursue ongoing organic growth initiatives and have flexibility to pursue inorganic growth opportunities.
Water
DuPont says Water will be a global technology leader with a comprehensive portfolio of water filtration and purification solutions with leading technologies in reverse osmosis, ion exchange and ultrafiltration. Its solutions provide critical components and systems that generate clean and fit-for-purpose 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 comprise DuPont’s current Water Solutions line of business. The company adds that, with profitable growth and strong cash generation, Water will be well positioned to drive earnings growth through continued investment in the business as well as potential inorganic growth opportunities.
DuPont expects to complete the separations within 18 to 24 months. The separation transactions will not require a shareholder vote and are subject to satisfaction of customary conditions, including 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.
It anticipates that all three companies will have strong balance sheets and will be capitalised to provide the financial flexibility to take advantage of future growth opportunities. New DuPont is expected to maintain its investment grade credit rating.
