DuPont announces a plan to split into three independent, publicly traded companies

DuPont (NYSE: DD) announced a plan to split into three separate publicly traded companies. Under the plan, DuPont would complete the proposed spin-offs of its electronics and water businesses tax-free to its shareholders, and after the spin-offs were completed, New DuPont would continue to be a leading diversified industrial company. Both the electronics and water industries will benefit from increased concentration and flexibility in their industries as independent entities. At the time of separation, each company will have strong balance sheets, attractive financial profiles and attractive growth opportunities.

As leading independent businesses, we expect every business to benefit from:

• Ability to adapt capital allocation strategies to meet diverse strategic growth objectives
• Greater strategic flexibility to pursue portfolio-strengthening mergers and acquisitions
• Attractive investment profiles appealing to a variety of investor bases
• Distinct boards and management teams included world-class leaders with a proven track record of creating value in every industry

“This is an extraordinary opportunity to deliver long-term, sustainable shareholder value by creating three strong, industry-leading companies,” said Ed Breen, president and CEO of DuPont. “The three-way separation will unlock additional value for shareholders and customers, as well as create new opportunities for employees. Most importantly, each company will have greater flexibility to pursue its own focused growth strategies, including strengthening its portfolio of mergers and acquisitions.

A review of three leading independent companies

The new DuPont: a diversified industrial company with a portfolio of iconic brands and solutions

New DuPont will be a leading, diversified industrial company powered by deep materials science and application engineering expertise, industry-leading innovation, superior manufacturing capabilities and iconic brands such as Tyvek®, Kevlar® and Nomex®. The new DuPont will have a strong presence in rapidly growing healthcare end markets, including biopharmaceutical consumables, medical devices and medical packaging. The company will also be a leading supplier 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 end markets.

The new DuPont will consist of existing businesses in the Water & Protection segment (excluding water solutions), most of the businesses in the Industrial solutions segment (including healthcare) and retained businesses in the Corporate segment (including adhesives). In 2023, these companies generated net sales of approximately $6.6 billion and an operating EBITDA margin of approximately 24%.

The new DuPont is expected to continue to deliver high margins, generate solid cash flow and pursue a sustainable financial policy similar to the current DuPont, including the ability to invest in growth opportunities.

Electronics: Global leader in electronic materials, including semiconductor solutions and advanced electronic products

Electronics will be a leading global supplier of diversified electronic materials, including key consumables used in semiconductor chip production, as well as advanced electronic materials that ensure reliable signal integrity, power management and thermal management. The company will be well-positioned to capitalize on growth in the semiconductor industry, driven by demand for high-performance computing from artificial intelligence, high-speed connectivity, intelligent and autonomous vehicles, and the Internet of Things, among other megatrends.

Electronics will include the existing Semiconductor Technologies and Interconnect Solutions business lines, as well as Industrial Solutions’ electronics-related product lines. In 2023, these companies generated net sales of approximately $4.0 billion and an operating EBITDA margin of approximately 29%.

Electronics will focus on innovation-based development. With solid cash flow generation, Electronics will be well-positioned to pursue continued organic growth initiatives and will have the agility to pursue inorganic growth opportunities.

Water: 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 include critical components and systems that produce clean and fit-for-purpose water across a variety of market segments, including industrial water and energy, life sciences and specialty, municipal and desalination, and residential and commercial.

Water will include DuPont’s existing Water Solutions business line, which generated 2023 net sales of approximately $1.5 billion and an EBITDA operating margin of approximately 24%.

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 transaction details

DuPont expects to effect the proposed separation of the Electronics and Water businesses in a manner that will be tax-free to DuPont shareholders for U.S. federal income tax purposes.

DuPont expects to complete the separation within 18 to 24 months. The separation transactions will not require a shareholder vote and will be subject to customary conditions, including final approval by DuPont’s Board of Directors, receipt of a tax opinion from legal counsel, filing and effectiveness of Form 10 registration statements with the U.S. Securities and Exchange Commission, applicable approvals regulatory authorities and satisfactory completion of financing.

All three companies are expected to have strong balance sheets and capital, providing the financial flexibility needed to capitalize on 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 appointments of the following executives, effective June 1, 2024:

• Lori Koch, current CFO, is named CEO, replacing Ed Breen, who will retain his position as executive chairman.
• Antonella Franzen, currently CFO of DuPont’s Water and Conservation segment, has been named CFO.

Following the completion of the separation, Lori Koch and Antonella Franzen will remain in their positions at New DuPont. Details regarding additional executive leadership and Board appointments are expected to be announced prior to the respective separations.