DuPont (NYSE:DD) shares gained more than 5% pre-market today after the company announced its intention to split into three independent, publicly traded companies focused on Electronics, Water, and a diversified industrial segment. The restructuring aims to increase shareholder value by enabling each new entity to focus on its specific market. The company stated that the separations are intended to be tax-free for DuPont shareholders.
The reorganization will result in New DuPont becoming a diversified industrial leader, while the Electronics and Water divisions will operate as separate companies, each with its own board and management team. New DuPont will retain its primary businesses, excluding Water Solutions, and will continue to apply its materials science expertise across sectors like healthcare and electric vehicles.
The new structure is designed to uphold high margins and strong cash flow, with financial policies similar to those of the current DuPont. The Electronics division, projected to have $4.0 billion in net sales and a 29% operating EBITDA margin in 2023, will concentrate on semiconductor solutions and advanced electronics products, benefiting from the expansion of high-performance computing, AI, and the Internet of Things. The Water division, specializing in water filtration and purification technologies, reported net sales of around $1.5 billion and a 24% operating EBITDA margin in 2023. It aims to boost earnings through ongoing investments and potential acquisitions.
DuPont expects to complete the separations within 18 to 24 months, subject to customary conditions and approvals, including those from DuPont’s Board of Directors and regulatory authorities.