DuPont de Nemours Inc. -- fresh off the breakup of chemical giant DowDuPont Inc. -- is considering unloading its nutrition and biosciences division, according to people familiar with the matter.
The Wilmington, Del.-based specialty-chemicals maker is working with advisers to evaluate options that could include selling or spinning off the business, said the people, who asked to not be identified because the matter isn't public. It is also considering a so-called reverse Morris trust, a tax-free merger with another company.
Logical partners for that kind of deal could include International Flavors & Fragrances Inc., Royal DSM NV, Kerry Group Plc and Givaudan SA, the people said.
DuPont stock rose on the news, climbing 3.7% to $68.53 in New York trading.
The division, which makes food additives and ingredients, could be worth at least $20 billion as a stand-alone entity, based on the trading multiples of rivals, the people said.
DuPont is in the early stages of the review and may opt not to proceed with a divestiture, they said.
A representative for DuPont declined to comment. Representatives for International Flavors, Royal DSM, Kerry and Givaudan weren't immediately available for comment.
DuPont, with a market value of about $50 billion, is one of the companies separated from DowDuPont, which was formed from the largest U.S. chemicals merger on record, completed in 2017. If DuPont succeeds in divesting the nutrition division, it would be left with businesses focused on materials for industries such as transportation, electronics and construction.
A sale would also add to an overhaul of DuPont's portfolio as the company looks to salvage shareholder value in the face of slowing markets and the U.S.-China trade war, which has crimped growth. DuPont split with Dow Inc. in April and in June spun off the Corteva Inc. agriculture business.
DuPont has already earmarked for sale six "noncore" businesses with a combined $2 billion in annual sales, including a unit that makes solar-panel materials. Chairman Ed Breen has said he would consider more moves.
DuPont could sell or spin off major business units including nutrition or electronics and imaging, Breen said May 29 at an industry conference held by AllianceBernstein Holding LP. DuPont has four major divisions that are big enough to stand on their own, he said.
"There's also all kinds of interesting things we have to look at, which would be maybe structured transactions with other companies that would be very beneficial potentially to shareholders," Breen said, according to a transcript compiled by Bloomberg. "You'd get a lot of synergies. You'd create a de facto world leader in the business, and you'd be very tax efficient for our shareholders."
For tax reasons, DuPont can't begin holding any talks with other companies until after the two-year anniversary of the combination that created its predecessor, he said. Dow and DuPont completed their merger on Aug. 31, 2017.
DuPont recently bolstered its mergers and acquisitions team with the hiring of Alex Khutorsky, a former partner at boutique investment bank Valence Group.
Analysts have suggested that Breen may use a similar playbook for DuPont as he did when breaking apart DowDuPont. Breen also engineered the breakup of Tyco International Plc.
Information for this article was contributed by Myriam Balezou of Bloomberg News.
Business on 08/07/2019