By Jacob Bunge And Angela Chen
DuPont Co. said Monday that activist investment firm Trian Fund
Management LP's proposal to break up the chemical company would
cost $4 billion, add continuing expenses 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."
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.
A spokeswoman for Trian declined to comment on DuPont's
breakup-cost estimates.
"DuPont is attempting to distract and mislead shareholders from
the real issues at the company," she said. "If a Trian principal
and our other nominees are elected to the company's board, we will
work constructively to help eliminate excessive corporate costs,
bureaucracy and management rhetoric, and bring the highest level of
accountability to the boardroom."
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
overhaul that excluded Trian nominees.
DuPont said in March that it was willing to 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.
Trian declined to comment.
Shares in DuPont advanced 61 cents to close at $72 each on the
New York Stock Exchange. The stock has declined 2% this year,
compared with a 1.1% 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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