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Interface News reporter | Zhuang Jian
DuPont plans to split into three separately listed companies, becoming another large US industrial group to spin off its operations in an effort to improve shareholder returns.
On May 22, local time, DuPont announced that it would spin off its electronics and water businesses through tax-free transactions and set up two separate listed companies. The newly established electronics company mainly includes DuPont's existing semiconductor technology and interconnection solutions business, while the water company undertakes DuPont's water solutions business.
The remaining DuPont business will focus on biopharmaceutical consumables, medical equipment and medical packaging, and mobile solutions for electric vehicles, which will be formed into the "new DuPont" company.
After the spin-off, New DuPont will become the largest of the three independently listed companies, with sales of $6.6 billion in 2023. Revenue from the soon-to-be-spun-off electronics business was $4 billion last year, while the water business was $1.5 billion.
On the day the split was announced, DuPont shares fell 1.Gutspoker.22%, to 78Gutspoker.55 US dollars, but rose 4.52 per cent to 82.1 US dollars in after-hours trading.
Barry Cross, professor and associate dean of the Smith School of Business at Queen's University, commented that traditional industrial groups are loose collections of parts that are no longer valuable and that business break-ups can provide more value to dedicated leadership teams and reduce interference from fraternal departments.
Edward Breen, DuPont's current chief executive, said in a statement that the split would give the new company more flexibility to pursue their focused growth strategies, including strengthening their portfolios through mergers and acquisitions.
Brin led the large-scale merger of DuPont and Dow Chemical in 2017 and restructured the company into three independently listed companies after the establishment of the consortium Dow DuPont. Among them, the chemical business belongs to the new Dow Chemical, the agricultural sector set up a new company, Codihua, and the new DuPont operates the special products business.
At the same time as DuPont announced its latest split plan, it also announced a leadership restructuring plan. Brin will step down as CEO on June 1 and become executive chairman of the company. Lori Koch, DuPont's current chief financial officer, will take over as chief executive from June 1.
DuPont is expected to complete the latest split within 18-24 months, subject to a shareholder vote and regulatory approval.
Before the DuPont split was announced, GE became the latest example of large industrial groups seeking to create value through spin-offs.
After spinning off its healthcare unit in early 2023, the manufacturing giant spun off its energy-related business in April and listed separately on the New York Stock Exchange as GE Vernova.
After the above spin-off, aero-engines have become the main business of GE, and the company has changed its name to GE Aerospace (GE Aerospace) and has become an independent listed company.
DuPont announced earlier this month that it raised its full-year sales forecast to $12.1 billion-$12.4 billion from $11.9 billion-$12.3 billion. DuPont said sales and sales were expected to grow in the second half of the year due to a recovery in the electronics market and a rebound in sales in the water treatment sector.
The company also raised its 2024 adjusted earnings per share forecast to $3.45-$3.75 from a previous estimate of $3.25-$3.65.