DuPont Split: Why A 220 Year Old Conglomerate Splitting 

DuPont De Numerous, a 220-year-old American multinational chemical company, announced on Wednesday that it will split its corporate powerhouse into 3 independent, publicly traded entities. The company plans to split its electronics and water business into separate entities, and the transaction will be tax-free for DuPont’s investors. Moreover, the company has assured the shareholders that it will complete the transaction in the next 18 to 24 months. However, this is subject to the opinion of the company’s board of directors. 

Moreover, the company has also announced massive changes in its leadership, which will be effective from 1 June onwards. Lori Koch, the current CFO, will take the helm as the new CEO of the slimmed-down company, while the existing CEO, Ed Breen, will be appointed as the executive chairman.

Like many big companies around the world, DuPont is breaking up because it believes that managing a small company is far easier and more practical than managing a conglomerate. 

This was echoed in a statement by the current and future executive chairman of the company, Ed Breen , when he said, “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.

In recent years, many major US companies, such as Johnson & Johnson, Kellogg’s, and General Electric, have announced break-ups and spin-offs, signaling a preference for smaller, more agile companies over the conglomerates that gained prominence in previous decades. With that being said, many companies are merging. Recently, Disney and Warner Bors. Discovery announced a merger to give their users a better deal. 

It is still unknown how investors will react to this split, and it is worth keeping track of how much this split will cost the company in terms of share price. For now, the split will still take around two years, which is a very long time and can significantly change the market dynamics.

Leave a Reply