DuPont exits coatings with $4.9 billion sale
Carlyle Group to be new owner
DuPont has signed a definitive agreement to sell its DuPont Performance Coatings (DPC) operation for $4.9 billion in cash to the Carlyle Group, an “alternative asset manager” which had $156 billion of assets under management across 99 funds and 63 fund of fund vehicles as of the end of Q2. Carlyle will fund the acquisition with equity from Carlyle Partners V and Carlyle Europe Partners III. The deal should close in Q1 2013, subject to customary closing conditions and regulatory approvals.
DPC is a global supplier of vehicle and industrial coating systems with 2012 expected sales of more than $4 billion and more than 11,000 employees. CEO and chair Ellen Kullman said that DPC “continues to grow and deliver solid results” but the company had decided it had better growth potential outside DuPont.
“This transaction is consistent with our vision to be the world’s most dynamic science company and long-term strategy of driving competitive advantages in agriculture and nutrition, advanced materials and biotechnology, which represent high-growth, high-margin opportunities,” she added. DuPont will remain active in the automotive industry, generating some $3 billion/year in sales via light materials, refrigerants, biobased seat fabrics and headliners and biofuels.
DuPont plans to eliminate general corporate overhead costs that were previously allocated to DPC but which are not part of the sale. As part of this, Carlyle will assume $250 million of unfunded pension liabilities. DuPont added that it will use the net after-tax proceeds from the sale “in a manner consistent with its cash deployment principles and goal to maximise shareholder value creation”.
Carlyle’s chemicals-related portfolio comprises: AZ Electronic Materials, a former part of Clariant that makes electronic chemicals; H.C. Starck, an international group of companies producing refractory metals and advanced ceramics and which had sales of €883 million last year; and, PQ Corporation, a producer of speciality inorganic performance chemicals and zeolite-based catalysts and adsorbents. It also owns PPD, a major supplier of laboratory and clinical development services to the pharmaceuticals and related industries.
Separately, in a much smaller deal DuPont has agreed to sell its professional products insecticide business to Syngenta for $125 million. This includes the pest control brands Advion and Acelepryn, plus other IP. The deal will expand Syngenta's product range to golf course and lawn care professionals and to ornamental growers, it said.