DuPont Shares Rise as Firm Responds to Activist Investor Seeking Its Breakup
DuPont's shares rise as firm responds to activist investor seeking its breakup.Reuters

DuPont's stock rose in early trading in New York, on news that the firm had a "constructive dialogue" with a major shareholder, Trian Fund Management, after the latter called on the chemicals giant to break itself up.

US-based DuPont's stock was trading 4.66% higher at 0947 EDT.

Earlier, DuPont, responding to Trian's campaign urging it to split into two, said in a statement: "Our board of directors and management team have taken firm action over several years that has delivered 220% total shareholder return since year-end 2008, compared to 144% for the S&P 500 during the same period...

"The board and management team remain committed to executing on our strategic plan to drive growth and profitability. The recently announced first phase of our redesign initiative to drive down costs by $1bn [£613m, €771m] and embed greater efficiencies, together with the separation of Performance Chemicals and our $5bn share repurchase program, reflect our board and management's commitment to enhance value for all DuPont shareholders.

"DuPont welcomes open communications with shareholders and values input toward our common goal of enhancing shareholder value...we have had a constructive dialogue with Trian."

Activist investor Nelson Peltz's Trian, among DuPont's largest shareholders, had asked the conglomerate to separate its high-growth businesses from those that generate strong cash flows.

Trian, which holds a $1.6bn stake in DuPont, wants the company to split into two - one holding its fast-growing agriculture, nutrition and health and industrial biosciences divisions. The other holding its cyclical businesses such as performance materials, safety and protection, electronics and communications.

Peltz said his proposal will eliminate $2bn to $4bn in annual costs and double the value of DuPont's shares over three years, saying the firm's conglomerate structure was "destroying value".

Petlz, in a 16 September letter to DuPont's board, argued that the firm's plan to hive off its performance chemical unit, which makes materials used in non-stick cookware, refrigerants and a white pigment used in toothpastes, and its stock buyback programme were "not enough to optimise shareholder value."

DuPont's stock, which finished at $65.83 on 16 September, has gained some 6.5% this year. The stock has surged some 15.5% over the past twelve months.