'Island of misfit toys’? DowDuPont finds more businesses to sell

DowDuPont is targeting more of its units for sale even before the company has completed its planned June 1 final split into separate farm-sales (Corteva) and industrial (“new DuPont”) businesses.

The “new” DuPont Co. is grouping several units that the company says don’t fit into its internal investment targets into a noncore business segment, whose leaders will seek to sell them, or find other ways to boost sales and profits independent of DuPont capital allocations.

The targeted noncore businesses include the company’s biomaterials; clean technologies; and photovoltaics and advanced materials (including the Hemlock Semiconductor joint venture) units. The noncore group will also include DuPont Sustainable Solutions, and the DuPont Teijin Films joint venture, for which the company had previously said it planned to seek buyers.

Those businesses were culled from all four of DuPont’s main business groups: electronics and imaging, nutrition and biosciences, transportation and advanced polymers, and safety and communication.

Executive chairman Edward Breen and CEO-designate Marc Doyle told investors they plan to continue funding in emerging technologies selling, for example, materials for 5G telecom systems in autonomous vehicles, and microbiome products.

Doyle identified the triage candidates in the company’s quarterly conference call with investors Thursday morning. He spoke after the company posted a weaker-than-expected quarterly profit report. DowDuPont shares closed at $34.67, down $2.50 (6.73 percent), trading below $36 for the first time since March.

Profits were down for three of DuPont’s four business groups, with lower demand “partly offset by higher prices,” and by strong sales in the safety and construction group, analyst Christopher Muir wrote in a report to clients of CFRA Research in New York. Muir cut his one-year price target for the stock to $42, from $47.

Besides the pending split between DuPont and Corteva, which combines former Dow and DuPont pesticide and seed businesses and is based in Wilmington, a third group, a “materials” company based around a reorganized Dow Chemical at Dow headquarters in Midland, Mich., split off in April.

Rival industrial companies and private-equity buyers, many of them employing former DuPont managers and advised by area law firms, have been circling the Wilmington-based company in recent months, asking to pick off bits of the conglomerate they hope to run more profitably.

They are confident that executive chairman Breen, of New Hope, will repeat his record as chief executive of the former Tyco International Ltd. and continue selling off parts of the company to maximize profits to shareholders and top executives.

Meanwhile, after an initial round of cuts that laid off or reassigned most of the scientists in DuPont’s former Central Research Unit, DuPont has been announcing new investments in a series of plants around the world, while also upgrading and adding automation equipment and data science labs at the company’s Experimental Station west of Wilmington, which state officials once feared the company might close.

Speculation about further asset sales has been frequent at DuPont since Breen announced plans for the three-way spin-off alongside the Dow merger in 2016. One dealmaker hoping to purchase cast-off DuPont units refers to the company as a “dog’s breakfast” mix of divergent businesses and opportunities.

Staff have used such terms as “cupcakes to Kevlar,” a comment on the wide range of the company’s products, and the “Island of Misfit Toys," noting the businesses are more diverse than at Dow or Corteva, to describe the “new” DuPont.

Dividing low-profit-margin, competitive commodities businesses from research-driven new products with potentially higher margins is an established practice at DuPont. In 2015 the company spun off Chemours, which operates legacy chemical businesses — and took over responsibility for many of DuPont’s potential long-term toxic chemical liabilities — from DuPont’s newly refurbished former headquarters on downtown Wilmington’s Rodney Square.

Other DuPont spin-offs based in the region include Axalta, a paint company based in Philadelphia; Lycra Co., a Wilmington-based subsidiary of China-based Shangdong Ruyi Investment Holding, which bought some ex-DuPont synthetics from Koch Bros.' Invista, owner of DuPont’s former nylon units; and Endo Pharmaceuticals, the Chester County-based drugmaker.

There are also a number of companies founded by former DuPont scientists, ranging from family- and worker-owned W.L. Gore & Co., the Newark, Del.-based company, known for Gore-Tex breathable fabrics, to start-ups such as Napigen, a Wilmington-based genome-editing technology developer founded by DuPont alumnus Hajime Sakai, which is developing strains of high-yield wheat.

Napigen, based in the Delaware Innovation Space, run by the University of Delaware, and backed by the state of Delaware, and occupying two former DuPont buildings at the Experimental Station, earlier this week said it raised a $500,000 investment from Breakout Labs.

“It was very natural for us to chose Delaware as our operation site because many of our team members, including me, were former scientists/managers at DuPont, living in the area,” said Sakai.