Tags: Trian | Peltz | DuPont | chemical

Trian's Peltz Buys DuPont Stake as Chemical Maker Weighs Options

Wednesday, 14 Aug 2013 05:44 PM

 

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Trian Fund Management LP, the hedge fund co-founded by activist investor Nelson Peltz, acquired a 0.6 percent stake in DuPont Co. as the chemical maker considers options for one of its more volatile businesses.

Trian held 5.78 million shares of Wilmington, Delaware-based DuPont as of June 30, the New York-based fund said in a regulatory filing Wednesday. The shares give Trian a stake worth about $343 million at Wednesday’s closing price. DuPont is the largest U.S. chemical maker by market capitalization, according to data compiled by Bloomberg.

Trian was first reported by CNBC to have “a very big” stake in DuPont on July 17. The following week, DuPont announced it was exploring options for its performance-chemicals unit, which makes titanium dioxide pigment, Teflon coatings, Freon refrigerants and chemicals such as cyanide.

DuPont, which produces thousands of products such as Kevlar anti-ballistic fiber and genetically modified corn, is weighing a separation of performance chemicals after the unit’s operating profit plunged 56 percent in the second quarter amid a slump in prices for titanium dioxide, a white pigment used in paints and plastics. Before jumping on CNBC’s July report, DuPont shares had gained 30 percent in the past decade, trailing the Dow Jones Industrial Average’s 70 percent increase.

Chairman and Chief Executive Officer Ellen Kullman said in an interview last month that she hasn’t spoken to Peltz and that he wasn’t the impetus for DuPont disclosing its plan for performance chemicals, which had been considered for months.

Trian successfully pushed Ingersoll-Rand Plc to spin off units last year. Peltz also is pressuring PepsiCo Inc., the world’s largest snack-food maker and second-biggest soda producer, to acquire competitor Mondelez International Inc., formerly known as Kraft Foods Inc. In 2006, Trian waged a six- month proxy fight with H.J. Heinz Co. to win seats on the board and persuade management to execute a turnaround plan.

Under Kullman’s leadership since 2009, DuPont has continued to shift away from traditional commodity products toward higher- margin businesses that capitalize on meeting global demand for food, energy and security. DuPont sold its auto-paint unit this year to private-equity firm Carlyle Group LP for $4.9 billion, and it acquired food ingredients and enzyme maker Danisco A/S in 2011 for about 33.4 billion kroner ($5.9 billion).

The titanium-dioxide industry is going through a period of upheaval. Rockwood Holdings Inc. is exiting production of the commodity, and chemical maker Huntsman Corp. said it may merge its pigment unit with a competitor’s and spin off the new company. Tronox Ltd. said in February it was interested in serving as an industry consolidator.

In the decade through July 16, DuPont’s stock has also trailed a ninefold gain at Monsanto Co., the world’s largest seed company, and a fivefold increase at Syngenta AG, the largest producer of crop chemicals. DuPont’s largest unit by sales and operating income last year was agriculture, which sells seeds and crop chemicals.

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