The leaders of DuPont de Nemours Inc. plan to separate the holding company’s electronics and water divisions from its core industrial chemical businesses, a move they say will increase the value of each group and give them more chances to capitalize on the growth in their sectors.
The plan—which has been hatched over the past six months and is expected to be completed by the spring of 2026—will create the following businesses:
- “New DuPont,” which will house healthcare, advanced mobility and safety/protection businesses (including well-known brands such as Tyvek, Kevlar and Nomex) that had 2023 sales of about $6.6 billion and operating EBITDA margins of about 24%.
- A global supplier of electronics materials used in semiconductor chips, circuit boards and heat management products. The unit last year generated operating margins of about 29% on sales of roughly $4 billion.
- A water treatment products company that had 2023 sales of about $1.5 billion and margins of about 24%. Half of the group’s revenues come from industrial and energy customers, with life sciences and specialty businesses picking up about a quarter of that $1.5 billion.
“This is an extraordinary opportunity to deliver long-term, sustainable shareholder value through the creation of three strong, industry-leading companies," Ed Breen, DuPont’s executive chairman and CEO, said in a statement. “Critically, each company will have greater flexibility to pursue their own focused growth strategies, including portfolio-enhancing M&A.”
Word of the planned split comes nearly seven years after DuPont’s predecessor entity merged with Dow Chemical Co., a deal that led to the divestiture of several businesses executives and directors saw as not vital to the combined operation. In the spring 2019, DuPont spun off its material sciences group as Dow Inc. and an agriculture-focused group as Corteva Inc. Since then, executives also have sold their nutrition and biosciences arm to International Flavors & Fragrance Inc. and much of its materials and mobility group (but not its automotive adhesives and fluids businesses) to Celanese Corp.
These moves are part of a broader focus on efficiency at many large companies. Todd Dubner, deal advisory and strategy principal in KPMG’s industrial manufacturing group, last summer told IndustryWeek that more boards are coming around to thinking that diversification can be more of a distraction than a benefit as each unit competes for capital and attention. Case in point: Stanley Black & Decker Inc.’s Don Allan recently told analysts he expects to continue to do “a little pruning” of the manufacturer’s brand portfolio.
Alongside the split-up plan, DuPont also announced that Breen—who is 68 and has led the company since 2015—will step down as CEO in a few days to make way for CFO Lori Koch. Antonella Franzen, who is today CFO of DuPont’s water and protection segment, will in turn move into Koch’s current seat.
On a conference call discussing the plan, Breen and Koch said the plan is expected to cost DuPont about $700 million and added that building out the needed teams of each future company will require another $60 million in the coming two years. Breen told analysts he expects the leadership teams of each business to be a mixture of outside hires and “some really nice promotions.”
Investors took the breakup news in stride: Shares of DuPont (Ticker: DD) were up only slightly to $78.92 in midday trading May 23. Over the past six months, they have climbed about 10%, growing the company’s market capitalization to about $33 billion.
