Dupont latest target in activist Peltz's crosshairs
No company is too old, too big or too revered to be spared the attack of activist investors these days.
Wall Street’s leading breakup artist is fed up with what he says is bad chemistry at DuPont (DD) and wants the 200-year-old company and 80-year member of the Dow Jones Industrial Average (^DJI) busted apart.
Nelson Peltz, the 72-year old activist who runs Trian Fund Management, says the brass at DuPont has so far spurned his idea to split Dupont’s agricultural and nutrition business from its industrial materials division - effectively cleaving the company into faster- and slower-growing pieces.
He further argues that DuPont is a fat-marbled organization, a lazy conglomerate that spends $2 to $4 billion more in corporate overhead than it needs to due to its complex structure – not to mention maintenance of a golf course, hotel and movie theater.
This is a standard scheme from the Peltz playbook. Years ago he forced the split of the old Kraft Foods into Kraft (KRFT) and Mondelez (MDLZ), and achieved a similar maneuver with Ingersoll-Rand (IR).
The attempted shakeup – or shakedown – of Dupont isn’t a guaranteed winner for Peltz. DuPont shares have outperformed the market nicely since the 2009 market low, and CEO Ellen Kullman has moved to streamline the business with a pending sale of a performance-materials unit.
But the key takeaway here is that with no more low-hanging fruit worth collecting after a powerful five-plus-year bull market has made so many stocks expensive, activists feel they need to shake the trees to make a buck. And no company is too big or too venerable to feel safe.
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