The activist investor that has amassed a nearly 3% stake—worth $1.6 billion—in DuPont is unhappy with the pace and breadth of DuPont’s restructuring moves. Trian Fund Management says the Wilmington, Del.-based giant needs a more aggressive approach if it wants to significantly boost returns to shareholders.
In a letter to DuPont’s board, Trian’s partners, including founder Nelson Peltz, outline a plan that they say could double the value of DuPont’s shares—worth more than $60 billion today—within three years.
The Trian partners praise recent DuPont moves, including the planned spin-off of its performance chemicals business into a new company that would operate long-held DuPont businesses such as titanium dioxide and fluorochemicals.
Trian suggests that DuPont should further split into two more companies. One would be a high-growth firm that would operate DuPont’s agriculture, nutrition and health, and industrial biosciences businesses. The other would be a cyclical, high-cash-generating company that would house its performance materials, electronic chemicals, and safety and protection businesses.
Trian argues that DuPont’s conglomerate structure holds the company back by adding between $2 billion and $4 billion annually in unnecessary costs. DuPont, Trian points out, even operates a hotel, a theater, and a country club. “We can no longer be silent as DuPont continues to struggle to execute what we are convinced is a flawed business plan,” they write.
In response, DuPont says it has had a “constructive dialogue with Trian” but also notes that it has earned a 220% return for shareholders since 2008, versus 144% for the S&P 500 Index. In its statement, it also highlights a $1 billion cost reduction initiative as well as a $5 billion share buyback program.