DuPont to hive off $1.5-billion water division into separate company
Chemicals behemoth DuPont has announced plans to separate into three distinct publicly-traded companies. As part of the plan, DuPont will hive off its water division into a separate company, which will benefit from increased focus and agility.
While New DuPont will emerge as a premier diversified industrial company following completion of the separation, the third entity will be focussed on electronics. Names of proposed hived-off water and electronics companies are not yet known.
“This is an extraordinary opportunity to deliver long-term, sustainable shareholder value through the creation of three strong, industry-leading companies,” said DuPont Executive Chairman and Chief Executive Officer Ed Breen in an official statement.
“The three-way separation will unlock incremental value for shareholders and customers and also create new opportunities for employees. Critically, each company will have greater flexibility to pursue their own focused growth strategies, including portfolio enhancing M&A”, he added
According to the statement, 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 provide critical components and systems that generate clean and fit-for-purpose water across a variety of market segments including industrial water and energy, life sciences and specialties, municipal and desalination, and residential and commercial.
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 per cent in 2023.
With profitable growth and strong cash generation, water will be well positioned to drive earnings growth through continued investment in the business as well as potential inorganic growth opportunities, said the statement.
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 about 24 per cent in 2023.
New DuPont is expected to continue to deliver strong margins, generate robust cash flow and will have a balanced financial policy similar to the current DuPont, including the ability to invest in growth opportunities.
DuPont expects to complete the separations in 18-24 months. As leading standalone companies, each business is expected to benefit from an ability to tailor capital allocation strategies to pursue differential strategic growth objectives as well as enhanced strategic flexibility to pursue portfolio enhancing M&A, the statement added.
