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DuPont is splitting into 3 companies … again. What does this mean for Delaware?

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DuPont is splitting into 3 companies … again. What does this mean for Delaware?

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  • DuPont de Nemours will split into three companies: “New DuPont,” “Electronics” and “Water.”
  • The process will take 18 to 24 months, executives say, and the board of directors still must offer final approval.
  • The most recent break-up for DuPont occurred in 2019.

Stop us if you’ve heard this one before: DuPont is splitting into three companies.

The historic Delaware-founded multinational chemical company — inextricably bound up with the history and development of the First State since its beginning in 1802 — announced late Wednesday that it would spin off its electronics and water businesses as two new publicly traded companies.

This will be the second time in a half-decade that the company will divide into smaller parts.

The process this time will take 18 to 24 months, executives say, and the board of directors still must offer final approval. Effective June 1, officials announced, DuPont de Nemours CEO Ed Breen would step back to become executive chairman of the board overseeing the split of the three companies. Current chief financial officer Lori Koch would take over as CEO.

The most recent break-up for DuPont occurred five years ago. After merging with Dow Chemical in 2015, the combined DowDuPont entity quickly filed for a multibillion-dollar divorce.

In 2019, the company spun off into three business entities. Dow kept its headquarters in Michigan, while DuPont’s agricultural business became a company called Corteva Agriscience, now headquartered in Indianapolis.

The historical DuPont business became DuPont de Nemours, with headquarters in Chestnut Run near Wilmington.

At the time, executives and commentators said those spinoffs would create three “leaner, more nimble” companies. Executives are saying the same thing now, about the new split.

So what will “New DuPont” look like when DuPont de Nemours splits up? And what does this split mean for Delaware employees of DuPont, or retired DuPont employees with pensions? Here’s what we know.

What 3 DuPont spinoffs will be created after this split?

The planned electronics and water spinoffs don’t yet have names. Executives are instead calling them by the catchy names of “Electronics” and “Water.”

The core, diversified DuPont company is being referred to as “New DuPont,” and will retain the advanced mobility and protective-gear and health care arms of DuPont de Nemours.

Here’s how the businesses will be split out, according to a presentation Thursday morning from incoming DuPont CEO Lori Koch and outgoing CEO Ed Breen.

“New DuPont”: $6.6 billion estimated sales

“New DuPont” will be the biggest of the three companies, about half as big as the current DuPont.

A quarter of the business will be in the Healthcare segment, including the recently acquired Spectrum Plastics and medical applications for Tyvek. A quarter will be Advanced Mobility, providing materials for the next generation of electric cars and aerospace, as well as energy storage. Fully half of the New DuPont’s business will be Safety and Protection, notably including blockbuster materials Kevlar and Tyvex.

Electronics: $4 billion in projected sales

The electronics business will provide materials for semiconductor chips, printed circuit boards, and thermal shielding, as well as interconnection technologies — including a future focus on materials for high-performance computing with AI.

Water: $1.5 billion in projected sales

DuPont’s water business is the smallest, though executives said it may have the most room for growth. Mostly the business focuses on the filtration, purification and extraction of compounds from water — as well as the creation of high-purity water for industries like solar and semi-conductors. Some future applications will include the green hydrogen industry.

What does DuPont gain by splitting up its company?

In part, flexibility. In her presentation to investors Thursday, incoming CEO Koch said one of the main things the smaller and more focused DuPont spinoffs will gain is the ability to conduct mergers and acquisitions with greater ease.

DuPont executives say all three companies will be in a market-leading position in their respective arenas after separation, and that the new boards appointed for each company would have more specialized expertise.

More to the point, executives said that the move would “unlock shareholder value.” This is shorthand for “make stock prices go up.”

Spinoffs appear to be part of the current conventional wisdom for corporate governance. The past three years have seen more corporate spinoffs than any previous years, according to data tracked by Bloomberg Law this year — a pace many analysts expect to continue, because of a broad perception that spinoffs often outperform the market as a whole.

The response among markets and analysts has mostly been measured, though CNBC financial commentator Jeff Marks dubbed the move “classic Ed Breen,” calling the spinoff “another page out of the long-time CEO’s playbook of doing whatever’s necessary to create value for shareholders.” Marks wrote Thursday that DuPont had recently been trading “below the sum of its parts.”

DuPont stock jumped about 5% at news of the spinoffs late Wednesday, but dropped back closer to baseline after the investors presentation Thursday morning.

What will happen to DuPont’s legal settlements over so-called ‘forever chemicals’?

Liabilities for these lawsuits will be split among the spun-off companies on a proportional basis, executives outlined in the presentation to investors.

Will legacy DuPont pensions be affected by DuPont’s split into 3 companies?

Not likely.

Responsibility for DuPont’s legacy pensions was assumed by DuPont agricultural spinoff Corteva Agriscience in June 2019, according to DuPont spokespeople. The split at DuPont de Nemours should not affect those obligations.

Will DuPont spinoffs leave Delaware? Are layoffs expected?

No layoffs are currently projected to result from the spinoffs, according to company spokespeople.

“We are at the initial stage of this process, which we estimate will take about 18 to 24 months to complete,” wrote DuPont spokesman Daniel Turner.  “In the meantime, we are operating as business as usual.”

At the end of the process, Turner said, the current expected result is that all three companies remain in Delaware.

“Most employees will continue working at their current locations,” Turner wrote. “We don’t expect to reduce headcount as a result of the separations.”

That said, expectations aren’t promises, and history says little is assured.

Three years after Corteva Agriscience spun off from DuPont — taking the company’s seed, pesticide and herbicide business with it — Corteva announced in 2022 that it would move its headquarters to Indianapolis.

That location placed the company’s headquarters closer to the majority of Corteva’s U.S. manufacturing, processing and research facilities, which were located in Indiana and Iowa.

More: Corteva Agriscience, a DuPont spinoff, moves headquarters from Delaware to Indianapolis

Who is DuPont’s new CEO, Lori Koch?

Koch is DuPont’s current CFO, with more than 20 years at the company and a business and finance degree from Penn State University.

Before taking over as CFO, Koch was the head of investor relations and corporate financial planning analysis and led finance for multiple divisions of the company. Before arriving at DuPont in 2003, she held finance roles at Comcast Business Communications and Lucent Technologies.

Perhaps most relevant to the current moment, her company bio outlines that she played “a principal role in strategy, planning, and shareholder engagement across the DowDuPont transaction and subsequent split into three new independent companies.”

“I am delighted that Lori will serve as DuPont’s next CEO,” said outgoing CEO Breen. “She has had a tremendous impact as CFO, helping us navigate the unprecedented challenges of the past few years while positioning the company for long-term success.”

Antonella Franzen, a CFO of one of DuPont’s business units, will take over from Lori Koch as CFO of DuPont.

Matthew Korfhage is business and development reporter in the Delaware region covering all things related to land and money: openings and closings, construction, and the many corporations that call the First State home. Send tips and insults to mkorfhage@gannett.com.

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