DuPont (DD) to Divest 80% Stake in Delrin for $1.8 Billion
DuPont de Nemours, Inc. DD announced a definitive deal to sell an 80.1% controlling interest in the Delrin acetal homopolymer business to TJC LP for $1.8 billion. TJC has received fully committed funding for the transaction, which is expected to close around the end of 2023, subject to usual closing conditions and regulatory approval.
DuPont will receive $1.25 billion in pre-tax cash proceeds, subject to standard transaction adjustments, a $350 million note receivable, and a 19.9% non-controlling common equity stake in the Delrin business at the transaction conclusion.
This transaction is intended to maximize value for DuPont shareholders by providing significant cash proceeds at close, to be deployed per DuPont's strategic priorities, while also allowing DuPont to participate in future upside potential upon exit of retained equity interest in the Delrin business, the company noted.
Shares of DD have gained 26% over the past year compared with the 0.1% rise of its industry.
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The company, on its second-quarter call, stated that it now expects net sales for 2023 to be in the range of $12,450-$12,550 million. Adjusted earnings per share for 2023 are forecast to be $3.40-$3.50. For third-quarter 2023, the company sees net sales of roughly $3,150 million. Adjusted earnings per share for the quarter are projected at roughly 84 cents.
The Electronics & Industrial segment is expected to see a 10% organic decline in revenues compared to the previous year. However, the addition of Spectrum is set to boost reported revenues starting from Aug 1. Overall, full-year revenues are projected to decrease approximately 10% organically, primarily due to lower volumes and production adjustments.
For the Water & Protection unit, a mid-single-digit decline in revenues on an organic basis is expected compared to the previous year, as the benefit from carryover pricing ends. Despite this, Water Solutions is forecast to achieve mid-single-digit organic growth for the full year, though it may face some weakness in the second half due to softer demand in China.
On the other hand, Safety Solutions is projected to experience steady demand throughout 2023, driven by growth in the aerospace, automotive and healthcare sectors. Meanwhile, the construction end markets are expected to remain weak throughout the year, with the impact of destocking reducing in the second half.
DuPont de Nemours, Inc. Price and Consensus
DuPont de Nemours, Inc. price-consensus-chart | DuPont de Nemours, Inc. Quote
Zacks Rank & Key Picks
DuPont currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Carpenter Technology Corporation CRS, Denison Mine Corp. DNN and Veritiv Corporation VRTV.
Carpenter Technology currently sports a Zacks Rank #1 (Strong Buy). CRS shares have rallied 58.3% in the past year. CRS beat the Zacks Consensus Estimate in three of the last four quarters and matched once. It delivered a trailing four-quarter earnings surprise of 9.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Denison Mines currently sports a Zacks Rank #1. Denison Mines shares have gained 34.9% in the past year. DNN beat the Zacks Consensus Estimate in three of the last four quarters and met once. It delivered a trailing four-quarter earnings surprise of 75%, on average.
Veritiv currently carries a Zacks Rank #2 (Buy). Veritiv shares have rallied 24.2% in the past year. VRTV beat the Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 6%, on average.
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