DuPont de Nemours (DD) is making headlines Thursday after the global chemicals company announced its intention to split into three independent, publicly traded companies.
Over the next 18 to 24 months, DuPont will separate its Electronics and Water businesses from its core business. New DuPont will continue operating as a diversified industrial company while the new independent entities will "benefit from increased focus and agility in their respective industries," DuPont said in a press release announcing its spinoff plans. All three companies will have "strong balance sheets, attractive financial profiles and compelling growth opportunities," it added.
"This is an extraordinary opportunity to deliver long-term, sustainable shareholder value through the creation of three strong, industry-leading companies," DuPont CEO Ed Breen said in a statement.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
In addition to creating shareholder value, the separation will create new opportunities for employees, DuPont explained. "Critically, each company will have greater flexibility to pursue their own focused growth strategies, including portfolio enhancing M&A [mergers and acquisitions," the firm added.
Here's a breakdown of how each of the separate companies will look:
- New DuPont: This will be a diversified industrial company with brands such as Tyvek, Kevlar and Nomex. It will have a significant presence in the healthcare, electric vehicles and industrial sectors. The businesses within New DuPont generated sales of approximately $6.6 billion in 2023.
- Electronics: This company will specialize in electronic materials, including those used in semiconductor chip manufacturing, power management and thermal management. In 2023, this business achieved approximately $4.0 billion in sales.
- Water Solutions: This company will be a global leader in water technology with a portfolio including water filtration and purification solutions with leading technologies in reverse osmosis, ion exchange and ultrafiltration. This company will provide critical components and systems for multiple industries and generated approximately $1.5 billion in sales in 2023.
DuPont also announced that Lori Koch, currently the company's chief financial officer, will take over as CEO of DuPont on June 1. The company plans to announce the leadership teams of the new companies in advance of their separations.
DD's plan to separate follows in the footsteps of former industrial conglomerate General Electric – now GE Aerospace (GE) – which completed its massive three-way spinoff in early April.
Is DuPont a buy, sell or hold?
Analysts are mostly upbeat toward the materials stock. According to S&P Global Market Intelligence, the consensus analyst target price for DD stock is $83.72, representing implied upside of about 6% to current levels. Meanwhile, the consensus recommendation is a Buy.
Financial services firm UBS is one of the more bullish outfits on DuPont and sees the planned separation as a way to unlock value for shareholders.
"We see this as positive for the group and expect this to drive a higher value realization for the Electronics and Water businesses in particular, which we see as the most undervalued in the portfolio," UBS Global Research firm analyst Joshua Spector wrote in a note.
Specter rates DuPont a Buy with a $93 price target, representing implied upside of nearly 20% to current levels.
Related Content
-
Don’t Make These Five Mistakes on Your Tax ReturnTax Filing The IRS warns taxpayers to watch out for these common errors as they prepare to file.
-
Cooling February CPI Lifts Rate Cut Hopes: What the Experts Are SayingWhile the Fed is likely to keep interest rates unchanged next week, an encouraging February CPI report raises the odds for more easing later this year.
-
Cooling February CPI Lifts Rate Cut Hopes: What the Experts Are SayingWhile the Fed is likely to keep interest rates unchanged next week, an encouraging February CPI report raises the odds for more easing later this year.
-
This Underused IRA Option Offers Tax Benefits and Income SecurityLooking to avoid running out of money in retirement? Consider longevity protection provided by a QLAC as a component of your retirement income plan.
-
Stock Market Today: Trump Drives Another Up-and-Down DayInvestors, traders and speculators as well as businesses and households continue to adjust to rapidly changing times.
-
Should You Sell Tesla Stock as Elon Unrest Grows?Tesla's CEO is wearing many hats and is managing them "with great difficulty."
-
These Four Books Explore How to Leverage Our Outrage PositivelyThe authors offer some powerful tools to help us find solutions to discord rather than remaining silent or blowing up in anger.
-
Stock Market Today: Dow Off 890 Points on Tariff UncertaintyPresident Donald Trump still believes his ever-evolving plan for global trade will be "great for us," but "it takes a little time."
-
5 of Warren Buffett's Best InvestmentsWarren Buffett has had plenty of wins throughout his decades of investing. Here, we highlight five of Buffett's best investments.
-
Home Depot's Winning Ways Fueled Its 100,000% ReturnHome Depot's wide moat leaves little room for competition – and shareholders have profited as a result.
