Stocks of newly-separated DuPont de Nemours Inc. and Corteva both traded higher Monday on the New York Stock Exchange, as traders bet they will be worth more apart, as their leaders promised.
DuPont closed at $76.10, a near 18 percent rise, after a 3-for-1 reverse stock split of its predecessor DowDuPont’s shares.
Corteva shares, granted to DuPont shareholders with the spin-off, rose to $26.97, up about 6 percent.
The split — both companies now have headquarters on DuPont’s campus near Wilmington — wraps up the 2015 agreement that joined the former E.I. Du Pont de Nemours with rival Dow Chemical Co. of Midland, Mich., into a conglomerate known as DowDuPont.
A reorganized Dow separated from the other two in April. After initially gaining value, Dow has lately traded below its spin-off price, but was up more than 1 percent to around $47.45 Monday morning. All three companies are heavily invested in China production and markets, and their shares have been sensitive to trade concerns.
The DowDuPont shotgun marriage and the ensuing separations were concluded under pressure from outside investors tired of disappointing earnings. The goals under chief executive Edward Breen: to cut costs (central R&D, marketing and management), shut or sell slow-growing or isolated businesses, boost profits and cash payouts to investors, and transfer assets into more sustainable corporate groupings while minimizing U.S. income taxes. Breen earlier engineered the profitable reorganization and dismemberment of Tyco International Ltd.
The company now known as DuPont de Nemours Inc., trading under DuPont’s old DD symbol, includes business groups organized around food and drug additives, smartphone and automotive electronics, and military and construction sales. Or, it contains “health and wellness, advanced mobility, connectivity and sustainability," in new chief executive Mark Doyle’s words — with around $20 billion in yearly sales.
The structure remains fluid, as several businesses are for sale. DuPont planned meetings Monday with employees to talk about a new branding campaign emphasizing the company’s use of science and technology, urging staff to “Invent the Better Now.”
In a statement, Breen, now executive chairman of the new DuPont, promised investors higher profits from “disciplined innovation, a relentless focus on [investment returns], and a best-in-class cost structure.” The company has 170 factories worldwide supported by a research, development and engineering network.
Corteva — from the Latin word for “heart” and a Hebrew term for “nature" — is trading under the CTVA ticker. Chief executive Jim Collins, a DuPont veteran, called it “a new kind of agriculture company, well positioned to compete and win by providing farmers the complete solution they need for sustainable, long-term growth and improved profitability.” Brands include Pioneer, Mycogen, and Brevant seeds; Aproach Prima fungicides; and Quelex herbicides, among others.
With $14 billion in yearly sales, Corteva has about one-seventh of the global farm supply market and is one of five companies with global farm-chemical research capacity, according to the European Commission.
Another is Philadelphia-based FMC, which bought and traded for a list of DuPont pesticides and its Newark, Del., pesticide research labs after the EC said the industry needed more competition.
Corteva has 150 labs and R&D facilities, and customers in 120 countries. The company hopes to cut another $1.2 billion in costs over the next two years, chief financial officer Greg Friedman said in a statement.
DuPont has sold or closed many of its Philadelphia-area plants in recent years. It still manufactures O-rings in Newark, Del., and maintains research and development labs near its headquarters at the DuPont Experimental Station. Corteva’s largest research facilities are in Iowa (Pioneer seeds) and Indiana (the former Dow pesticide center). Delaware state officials cut DuPont’s former taxes by more than $30 million a year to get the two companies to agree to keep their offices here.
“Everybody wishes the stock price was a little higher. But I’m an optimist. In their core businesses, for example in the construction space, they are doing really well. And we are one [President Donald Trump] tweet away from having the trade deal with China solved,” said Delaware investor and founding-family heir Ben du Pont, who bought and is refurbishing the company’s former country club, and is a leader in the effort to boost Delaware’s tech sector as a replacement for its shrunken heavy industries.
“DuPont ought to be seen as a proxy for the broader economy, and the broader economy is roaring," he added. Delaware is prospering, too, with the growth of DuPont spin-offs such as Chemours and Corteva, as well as native employers such as CSC and Incyte, he added. “We live in a world where businesses that don’t grow get bought up or closed down,” du Pont concluded.