DuPont, a century-old company, splits into three
The spin-off business is seen by many large multinational corporations as a key strategy to enhance shareholder value, including big blue-chip stocks such as Johnson & Johnson, General Electric, etc., have carried out spin-offs in recent years
DuPont, a multinational chemical giant with over 200 years of history, announced on Wednesday that it will split into three independent publicly traded companies to further streamline its organizational structure.
According to DuPont's plan, the company will split its electronics and water business segments through a tax-free transaction to establish two unnamed subsidiary companies. The newly formed electronics company will focus on "semiconductor solutions and advanced electronic products," while the new water company will become "a comprehensive water treatment solutions provider." The remaining segments will continue to be retained within the DuPont system. The post-split "leaner DuPont" business will concentrate on industries such as biopharmaceuticals and medical devices.
DuPont expects the split to be completed in the next 18 to 24 months, pending final approval from the board of directors and regulatory authorities.
In addition to the restructuring, DuPont also announced senior management changes: as of June 1, current CFO Lori Koch will take over as CEO, while current CEO Ed Breen will remain as executive chairman. Once the split is completed, Koch will continue to serve as the CEO of the newly formed leaner DuPont company.
Splitting businesses is seen by many large multinational corporations as a key strategy to enhance shareholder value. Previously, companies like Johnson & Johnson, United Technologies, Danaher, and General Electric have all announced splits. Many CEOs and corporate boards emphasize that smaller companies are more agile. Breen also reiterated this point in a statement, stating that after the split, each of the three companies will have greater flexibility to pursue their key strategic development, including actions like mergers and acquisitions to optimize business portfolios.
Barry Cross, professor and assistant dean at Queen's University Smith School of Business, told the media:
"Splitting can allow the leadership team to focus, reduce interference from sister units, and bring more value."
This split is DuPont's second major restructuring in five years. In 2019, the DowDuPont company, formed by the merger of DuPont and Dow Chemical, split into three independent companies: DuPont, Dow, and agricultural company Corteva.
As of the time of publication, DuPont's stock in after-hours trading surged over 4%