Following the news that Corteva will split into crop protection and seed companies, I checked out the five-year stock performance of the companies involved in the complex 2017 merger and separation of Dow and DuPont.
The winner, drum roll please, is Corteva, whose stock price has increased by 86% thanks to product lines like the former DuPont Pioneer seed business and Dow's agriscience operations. The formation of Corteva was the driving force behind the Dow-DuPont deal.
Along the way, DuPont was also able to unload its substantial pension obligations to Corteva, along with some liabilities, largely stemming from PFA "forever chemicals."
DuPont's stock price has risen by a less robust 25% over the past five years, thanks in part to shedding slow-growth businesses.
Still, the latest move is the spin-off of DuPont's faster-growing electronics business, which now includes the former Dow semiconductor materials business that was founded in Delaware and is still known to some as Rodel.
DuPont recently sold off its Kevlar and Nomex protective materials lines. Despite being well-known brands, the business lines were growing too slowly for DuPont's liking.
Earlier, DuPont spun off its food ingredients operations to New Jersey-based IFF. DuPont shareholders ended up owning a majority stake in iFF in what was known as a tax-driven "Reverse Morris" deal.
The loser out of the DowDuPont merger appears to be Dow, which is now a garden-variety chemical company. Dow's stock price has dropped 58% over the last five years, following the transfer of its agriscience business to Corteva.
The unanswered question is whether all of this slicing and dicing was beneficial to stockholders or if a more patient approach of increasing efficiency and lowering overhead costs would have worked better. The financial wizardry certainly aided the bankers, lawyers, and others who earned handsome fees from the cavalcade of deal-making.
Meanwhile, the Dow Jones Index grew by 60% during the past five years.
Finally, there is DuPont spin-off, Chemours, which is in its 20th year. Chemours' stock price is down 45% over the past five years. Axalta, the former DuPont "Jeff Gordon" auto paint and coatings spin-off eked out a five-year stock gain of 2.7%. - Doug Rainey, chief content officer.
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