DuPont plans three-way split

DuPont has announced a plan to separate into three separate, publicly traded companies over the course of the 18-24 months, subject to the satisfaction of customary conditions, including final board approval regulatory approvals and satisfactory completion of financing. Outgoing CEO and executive chairman Ed Breen (pictured) described this as “an extraordinary opportunity to deliver long-term, sustainable shareholder value”.

The ‘New DuPont’ will be a diversified industrial company with sales of about $6.6 billion and operating EBITDA margin of about 24% in 2023. It will comprise: the existing Water & Protection segment businesses, other than Water Solutions); most of these within Industrial Solutions; and the retained businesses reported in Corporate.

About half of the new business’s sales will be in construction, with others including mobility, such as electric vehicle batteries and structural adhesives, and healthcare, mainly biopharma and medical devices. “New DuPont is expected 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,” the company stated.

‘Electronics’ will have the existing Semiconductor Technologies and Interconnect Solutions lines of business, plus the electronics-related product lines from Industrial Solutions. These businesses had net sales of about $4.0 billion and an operating EBITDA margin of approximately 29% in 2023. Its focus will be on “innovation-based growth”. It will be mainly active in AI chips, digital displays, printed circuit boards and consumer electronics.

Finally, ‘Water’ will house the Water Solutions line, with net sales of around $1.5 billion and operating EBITDA margin of about 24% in 2023. It will supply reverse osmosis, ion exchange and ultrafiltration products for industrial and municipal water treatment, life sciences and emerging technologies like direct lithium extraction. The company said that it “will be well positioned to drive earnings growth through continued investment in the business as well as potential inorganic growth opportunities”.

“Critically, each company will have greater flexibility to pursue their own focused growth strategies, including portfolio enhancing M&A,” added Breen, who has now been succeeded as CEO by Lori Koch, but remains executive chairman. Antonella Franzen, hitherto CFO of Water & Protection, segment has become CFO in Koch’s place.

The existing DuPont is itself the result of a merger with Dow Chemical in 2019, followed by a three-way split into Dow, DuPont and Corteva. Having been the largest chemical company in the world in the 1990s, last year it placed 39 in Billion-Dollar Club, Chemical Week’s ranking of chemical companies by publicly disclosed revenues, having also made some divestments since then.