DuPont (NYSE: DD) 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 tax-free to its shareholders, with New DuPont continuing as a premier diversified industrial company after completion of the separations. Both Electronics and Water will benefit from increased focus and agility in their respective industries as independent entities. At separation, each company will have strong balance sheets, attractive financial profiles, and compelling growth opportunities.
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 M&A
- Compelling investment profiles appealing to different investor bases
- Distinct boards of directors and management teams comprised world-class leaders with track records of driving value creation in each 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.”
Overview of Three Leading Standalone Companies
New DuPont: A Diversified Industrial Company with a Portfolio of Iconic Brands and Solutions
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 iconic brands such as Tyvek®, Kevlar®, and Nomex®. New DuPont will have a strong presence in fast-growing healthcare end-markets, including biopharma consumables, medical devices, and medical packaging applications. The company will also be a leading provider of key technologies enabling advanced mobility, particularly in electric vehicles. Finally, New DuPont will remain a provider of advanced solutions serving safety, construction, aerospace, and other industrial-based end markets.
New DuPont will 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.
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.
Electronics: A Global Leader for Electronic Materials, including Semiconductor Solutions and Advanced Electronics Products
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 will comprise the existing Semiconductor Technologies and Interconnect Solutions lines of business, as well as the electronics-related product lines from Industrial Solutions. In 2023, these businesses generated net sales of approximately $4.0 billion and an operating EBITDA margin of approximately 29%.
Electronics will focus on innovation-based growth. With robust cash flow generation, Electronics will be well positioned to pursue ongoing organic growth initiatives and have the flexibility to pursue inorganic growth opportunities.
Water: A Comprehensive Water Solutions Provider with Leading Filtration Technologies
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 various 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, which generated net sales of approximately $1.5 billion and an operating EBITDA margin of approximately 24% in 2023.
With profitable growth and strong cash generation, Water will be well-positioned to drive earnings growth through continued investment in the business and potential inorganic growth opportunities.
Separation Transactions Detail
DuPont expects to execute the proposed separations of Electronics and Water in a way that will be tax-free for DuPont shareholders for U.S. federal income tax purposes.
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.
All three companies are anticipated to have strong balance sheets and be capitalized to provide the financial flexibility to take advantage of future growth opportunities. New DuPont is expected to maintain its investment-grade credit rating.
Leadership Updates
In a separate press release issued today, DuPont announced the following leadership appointments, effective June 1, 2024:
- Lori Koch, current Chief Financial Officer, is appointed Chief Executive Officer, succeeding Ed Breen, who will retain his role of Executive Chairman.
- Antonella Franzen, currently the Chief Financial Officer of DuPont’s Water & Protection segment, has been appointed Chief Financial Officer.
After completing the separations, Lori Koch and Antonella Franzen will remain in their respective positions for New DuPont. Specifics around additional executive leadership and Board of Director appointments are expected to be announced before the respective separations.
