August 7, 2019　

DuPont Considers Sale of Biosciences Unit That Could Fetch $20 Billion

The serial dealmaker running DuPont de Nemours Inc. is gearing up for another $20 billion-plus divestment that could become one of the chemical industry’s biggest transactions this year.

DuPont Chairman Ed Breen is considering unloading the company’s nutrition and biosciences business, one of its fastest-growing divisions, according to people familiar with the matter. A sale would extend a dramatic overhaul of DuPont’s portfolio as it looks to salvage shareholder value in the face of slowing markets and the U.S.-China trade war that has crimped growth.

DuPont’s current incarnation resulted from the breakup of DowDuPont, the chemical giant created in a 2017 deal that was the chemical industry’s biggest merger of all time. It’s since spun off its Corteva Inc. agriculture business, which is now worth $22.5 billion as a standalone entity.

A divestment of the nutrition and biosciences division -- which makes food additives and ingredients -- could help unlock more value for Wilmington, Delaware-based DuPont, which had a market capitalization of $51 billion at Tuesday’s close. The company is now working with advisers to evaluate options for the unit including a potential sale or spinoff, the people said.

More Spinoffs

It is also considering a so-called Reverse Morris Trust, a merger with another company structured to be tax-free. Logical partners for that kind of deal could include Royal DSM NV, Kerry Group Plc, Givaudan SA and International Flavors & Fragrances Inc., the people said. Some of the suitors have lined up advisers for potential bids, the people said.

The nutrition and biosciences unit, which has more than 10,000 employees, specializes in products from sweeteners and emulsifiers to dairy cultures and dietary fibers. DuPont has seen particular strength in areas such as plant-based meats and probiotics.

The division could be worth at least $20 billion on its own based on rivals’ trading multiples, the people said. Its revenue rose 14% last year to $6.8 billion, making it DuPont’s fastest-growing business after the industrial intermediates and infrastructure division, according to data compiled by Bloomberg.

M&A Playbook

DuPont is in the early stages of the review and may opt to not proceed with a divestiture, the people said. It also hasn’t started holding any formal talks with potential suitors yet, they said. Representatives for DuPont and International Flavors declined to comment. Representatives for DSM, Kerry and Givaudan weren’t immediately available for comment.

Analysts have suggested DuPont’s chairman may run a similar playbook for the company as he did when breaking apart DowDuPont. A serial dealmaker, Breen also engineered the breakup of Tyco International Plc. DuPont has already earmarked for sale six “non-core” businesses with a combined $2 billion in annual sales, including a unit that makes solar-panel materials, and Breen has said he would consider more moves.

DuPont has four major divisions big enough to stand on their own, and it could sell or spin major business units including nutrition or electronics and imaging, Breen said at an industry conference in May. For tax reasons, DuPont can’t begin holding any talks with other companies until after the two-year anniversary of the combination that created its predecessor, he said. Dow and DuPont completed their merger on Aug. 31, 2017.

If DuPont succeeds in divesting the nutrition division, it would be left with businesses focused on materials for industries such as transportation, electronics and construction.