Dupont 3 Way Break Up Notes

June 20, 2024 Update

InsideArbitrage published a great overview of the situation:

DuPont’s Three-Way Split – C-Suite Transitions

 

May 23, 2024 Update

On May 22, 2024, DuPont (DD) announced its plan to break up into three independent companies (new DuPont, Electronics, and Water). The transaction is expected to take 18 to 24 months to be completed.

New DuPont will be comprised of the existing businesses within the Water & Protection segment (excluding Water Solutions), the majority of businesses within Industrial Solutions (including healthcare), and the retained businesses reported in Corporate (including adhesives). These businesses generated net sales of approximately $6.6 billion and operating EBITDA margin of approximately 24% in 2023.

Electronics will be comprised of the existing Semiconductor Technologies and Interconnect Solutions lines of business, as well as the electronics-related product lines from Industrial Solutions. These businesses generated net sales of approximately $4.0 billion and operating EBITDA margin of approximately 29% in 2023.

Water will be comprised of DuPont’s current Water Solutions line of business which generated net sales of approximately $1.5 billion and operating EBITDA margin of approximately 24% in 2023.

I think this transaction makes a lot of sense. Electronics and Water comps are valued significantly higher than diversified industrials. As such, I think the transaction should unlock value. The stock has run up a bit following the announcement, and I think it makes sense to wait for the spin-off euphoria to fade before buying the stock. The transaction is going to take at least 18 months to play out so we have plenty of time.