From this week's C&EN, news of a sad divestiture (article by Alex Tullo):
Citing volatility and few growth prospects, DuPont says it will divest a big portion of its traditional chemical business, including its storied Teflon fluoropolymers brand and its industry-leading titanium dioxide pigment unit.
The company is exploring “strategic options” for its performance chemicals segment, a process that could mean a sale or a spin-off. The division includes well-known DuPont brands such as Teflon nonstick coatings, Nafion ion-exchange membranes, and Suva refrigerants. It also makes industrial chemicals such as aniline, sulfuric acid, and glycolic acid.
Performance chemicals is DuPont’s second-largest division, after seeds and agrochemicals. It’s also one of the company’s most profitable businesses. It posted $1.8 billion in operating income on $7.2 billion in sales last year—figures that are 29% and 20%, respectively, of the company’s total.
An exit would mark the second large divestiture of a long-held DuPont business in less than a year. In February, the company completed the $4.9 billion sale of its automotive coatings unit to the private equity firm Carlyle Group....Best wishes to the employees of the performance chemicals business -- and to all of us.
It just doesn't make sense to get rid of a business that's very profitable for you. I guess they are looking for something with more 'growth prospects' in which to invest all the money they will make from the sale, but keeping it around is good for 2 billion bucks a year, so they could probably take just the profits from that and invest it a new venture.
ReplyDeleteI don't buy the volatility reason. If people start buying less titanium dioxide and fluoropolymers, they will probably start buying less of everything else as well.
"Re-arranging deck chairs" comes to mind.
ReplyDelete