Investor calls for DuPont to break itself up
Investment firm Trian Fund Management LP is urging chemical conglomerate DuPont Co. to break itself up, saying that efforts already underway at the company to shed some of its businesses were not enough to fix what it called DuPont’s...
September 22, 2014 by Canadian Plastics
Investment firm Trian Fund Management LP is urging chemical conglomerate DuPont Co. to break itself up, saying that efforts already underway at the company to shed some of its businesses were not enough to fix what it called DuPont’s “underperformance.”
New York City-based Trian holds US$1.6 billion in DuPont stock, or roughly three per cent of the company. In a Sept. 17 letter to Wlimington, Del.-based DuPont, Trian said it “can no longer be silent as DuPont continues to struggle to execute what we are convinced is a flawed business plan.”
Trian is calling for DuPont to split itself into two firms, one of which would include DuPont’s Performance Materials unit, which supplies nylon, acetal, PBT, copolyester and ethylene copolymers, as well as polyester and nylon film.
DuPont, which is focusing on agriculture, energy and specialty materials, is already working on plans to spin off its performance chemical business, which makes materials such as Teflon and represents nearly 20 per cent of its revenue.
DuPont responded quickly with a brief statement that said the company’s board and management ”remain committed to executing on our strategic plan to drive growth and profitability.” The statement also noted that DuPont “has delivered 220 percent total shareholder return since year-end 2008, compared to 144 percent for the S&P 500 during the same period, by aggressively deploying our leading science across the company, strengthening and fine-tuning our portfolio, and through disciplined capital allocation. DuPont welcomes open communications with shareholders and values input toward our common goal of enhancing shareholder value…We have had a constructive dialogue with Trian.”
DuPont is a vast, 212-year-old company that makes food enzymes, nylon and detergents, among thousands of other products. The company’s total sales reached US$20.3 billion in the first half of 2014, but the firm’s profit fell more than 40 per cent to US$2.5 billion.