DuPont settles with Chemours
DuPont, its spin-off company Chemours, and Corteva, which unites DuPont’s and Dow’s former agrochemicals businesses, have agreed a settlement on all legal disputes concerning per- and polyfluoroalkyl substances (PFAS) arising out of the spin-off of Chemours in 2015.
Under this, DuPont (with Corteva) and Chemours will split certain qualified expenses incurred equally for up to 20 years and up to $4 billion. DuPont’s 50% will be limited to $2 billion. In addition, they will establish a $1 billion maximum escrow account for potential future PFAS liabilities over eight years, again on a 50-50 basis. Based on $670 million settlement between DuPont and Chemours in West Virginia in 2017, one financial analyst has estimated total PFAS legal liability for all three firms at $5.2 billion is litigation and $1.3 billion is cleanup costs.
“The agreement will provide a measure of security and certainty for each company and our respective shareholders using a transparent process to address and resolve any potential future legacy PFAS matters,” the three companies’ CEOs said in a joint statement.
This replaces an agreement on perfluorooctanoic acid (PFOA) made between DuPont and Chemours in 2017 and a subsequent amendment to the Chemours separation agreement. The three have also agreed to resolve ongoing PFOA litigation in Ohio, bar one case against DuPont that is currently pending appeal. The $83 million cost will be split $27 million each to DuPont and Corteva and $29 million to Chemours.
PFASs, including PFOA, are used in multiple applications, including non-stick and waterproof coatings, lubricants and foams for tackling fires. Over many decades, they have been discharged into multiple waterways in the US, which has no federal and few state limits. They have been linked to health problems like cancers of many types, organ failures and hormone disruptions, leading to multi-billion dollar lawsuits.
The spin-off of Chemours, which includes DuPont’s former fluourochemicals business, addressed legacy liabilities but the firms interpreted the terms differently. In 2019, Chemours sued DuPont, claiming that its estimates for the liability it would incur were “spectacularly wrong” and that DuPont unfairly dominated the separation proceedings.
The lawsuit was dismissed in 2020, a judge finding the separation agreement valid and ordering the firms to go to arbitration. The deal was agreed shortly before arbitration could take place. It does not remove Chemours’ obligations to indemnify it under the separation agreement, which was the initial cause of the disagreement.
Subsequently, DuPont announced the preliminary results of its exchange offer that will see its former nutrition and biosciences (N&B) business merge with IFF. The company will accept the offer, subject to certain conditions and the final exchange ratio is 0.718 of a share in N&B for one in DuPont. During the period of the offer, which ended on 29 January, nearly 370 million DuPont shares were tendered.
DuPont has also agreed to sell its Clean Technologies business for $510 million to a private equity consortium of BroadPeak Global, Asia Green Fund and the Saudi Arabian Industrial Investments Company. This is expected to close in Q2, subject to customary closing conditions and regulatory approvals.
DuPont Clean Technologies dates back to 1925. It offers catalyst and process technologies to regenerate sulfuric acid, hydroprocessing technology to desulfurise motor fuels, alkylation technology for clean gasoline and air pollution control systems for refineries and chemical facilities, plus related services.