DuPont (DD) Wraps Up Performance Chemicals Separation - Analyst Blog
DuPont DD has completed the earlier announced separation of its performance chemicals unit through the spin-off of The Chemours Company, a leading manufacturer of titanium dioxide (TiO2). Chemours – earlier a part of DuPont – is now an independent, publicly traded corporation.
Chemours has started "regular-way" trading on Jul 1, under the ticker symbol “CC.” Mark Vergnano, who had been overseeing the performance chemicals unit since 2009, is the president and CEO of the new independent entity.
In connection with the spin-off, shareholders of DuPont received one share of Chemours on July 1 (the distribution date) for every five shares of DuPont they held on the record date of Jun 23, 2015. Moreover, DuPont shareholders will receive cash payments in lieu of fractional shares of Chemours.
The performance chemicals unit, which generated sales of $6.5 billion in 2014, had long been a weak link as lower demand and pricing for TiO2 weighed on the division’s profitability. The separation of the business advances DuPont's transformation to a company which is more growth-driven, more science intensive and less cyclical.
DuPont remains focused on executing strategic actions including portfolio optimization, disciplined capital allocation and cost control. The spin-off of the performance chemicals unit is in sync with the company’s strategy to gradually shift its focus on high growth, less cyclical businesses including agriculture and nutrition.
DuPont is executing its company-wide redesign actions to support its more focused portfolio of businesses. The company sees cumulative savings of around $1.3 billion from these actions by 2017.
DuPont, in its first-quarter 2015 earnings call, said that it expects to repurchase shares worth around $4 billion utilizing the one-time dividend proceeds from the spin-off of the performance chemicals business over 12-18 months following the closure of the transaction. A part of the repurchase is expected before the end of this year.
DuPont currently carries a Zacks Rank #4 (Sell).
Better-ranked stocks in the chemicals space include LyondellBasell Industries N.V. LYB, Stepan Company SCL and Orion Engineered Carbons SA OEC, all with a Zacks Rank #1 (Strong Buy).
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