DuPont Co. said Monday that activist investment firm Trian Fund
Management LP's proposal to break up the chemical company would
cost $4 billion and diminish its research capabilities.
The estimate came as DuPont again resisted Trian's effort to
replace four DuPont directors, calling the investment firm's
campaign "value destructive."
A spokeswoman for Trian had no immediate comment.
Trian has been pushing for months to shake up the 212-year-old
chemical and agriculture conglomerate, calling for greater
accountability by DuPont's board and proposing to split DuPont into
one company focused on agriculture and nutrition and another
focused on industrial materials. Such a move would streamline
DuPont's businesses and help them better compete against rivals,
according to Trian.
DuPont estimated in an investor presentation on Monday that
separating the businesses would cost $4 billion, including expenses
related to forming the two new companies, shifting debt and tax
changes. The added costs of doubling administrative and legal
functions for two companies and tax-related expenses also would add
$1 billion in annual expenses, DuPont said.
Separating the companies also would eliminate DuPont's ability
to develop new products using scientific research that spans its
various divisions, the company said.
Trian, led by Chief Executive Nelson Peltz, has argued that
splitting the company would help eliminate $2 billion to $4 billion
in annual costs.
After DuPont spurned its earlier proposals, Trian in January
nominated four director candidates to DuPont's board, including Mr.
Peltz. In February, DuPont named two new directors in a board
revamp that excluded Trian nominees.
DuPont in March said it would add to its board one of Trian's
nominees, former GE Asset Management Chief Executive John Myers, as
part of what the company called a "constructive resolution" to the
proxy fight.
On Monday, however, the Wilmington, Del., company said "none of
Trian's nominees add value or skills needed to advance DuPont's
strategy." The company said Trian's candidates, including Mr.
Peltz, lack experience in the chemicals industry.
Shares of DuPont were up 40 cents at $71.79 in midday trading.
The stock has declined about 3.3% this year, compared with a 1%
increase in the S&P 500 stock index.
Write to Jacob Bunge at jacob.bunge@wsj.com and Angela Chen at
angela.chen@dowjones.com
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