DuPont exploring sale of performance chemicals unit
Wednesday, 24 July 2013
DuPont says it is exploring the sale or spin-off of its USD 7-billion per year performance chemicals unit as part of its transformation to a "higher growth, less cyclical company.”
DuPont plans to exit its once-lucrative paint pigments business to focus on a thriving agricultural unit better equipped to shield the U.S. chemicals maker from market volatility. Demand for titanium dioxide has long been susceptible to swings in the global economy. The company’s shares rose as much as 6 % on Tuesday to their highest in more than 13 years after the company said it would consider selling or spinning off its performance chemicals unit, which contributed a fifth of its sales last year.
DuPont’s consideration of strategic alternatives for its Performance Chemical segment may include a full or partial separation of each of these businesses from the company through a spin-off, sale or other transaction. The segment includes Titanium Technologies and Chemicals & Fluoroproducts businesses and industrial chemicals which generated total sales of USD 7.2 billion in 2012. DuPont may pursue a different strategic alternative for each business.
Investment bankers said that the paint pigments business is likely to attract interest from private equity firms that have been active bidders on chemicals businesses that have come to market over the last few years. They said that the business could be worth 6 or 7 times earnings before interest, taxes, depreciation and amortization. Using last year's pre-tax operating income of USD 1.62 billion, the unit could be worth more than USD 10 billion.
DuPont declined to comment on specific options.