Carlyle Group LP (CG), Monsanto Company (MON): E I Du Pont De Nemours And Co (DD)’s Really Being Strengthened by Going to Seed

Page 1 of 2

I can’t quite claim to have monitored E I Du Pont De Nemours And Co (NYSE:DD) since its founding back in 1802 as a gunpowder manufacturer. In the past few years, however, the big Delaware company has initiated a somewhat quiet restructuring that promises to make it far less cyclical and more compelling for investors.

Steadily buying and selling

In early 2011, for instance, the company acquired Danisco, a global enzyme and specialty food ingredients company based in Denmark. For $6.3 billion, including the assumption of debt, E I Du Pont De Nemours And Co (NYSE:DD) added a unit that, as is the case with its own fast-expanding agricultural unit, will be driven in the years and decades to come by our planet’s expected dramatic population growth.

E I Du Pont De Nemours And Co

Conversely, in 2012 the company accepted nearly $5 million from private equity’s Carlyle Group LP (NASDAQ:CG) for its car paint unit. The deal turned out to be one of more than a dozen salted away by Carlyle during the year.

Those deals, along with other trends at the company, indicate that the significant restructuring largely initiated during the reign of the company’s competent CEO, Ellen Kuhlman, is likely to continue and perhaps expand. As was manifested strongly in the second quarter, E I Du Pont De Nemours And Co (NYSE:DD) continues to follow in the footsteps of its rival Monsanto Company (NYSE:MON) in emphasizing agriculture and related areas (read Danisco’s food and enzyme products), while shedding its former base in more cyclical chemicals operations.

The new backbone

At was expected, DuPont’s ag unit — largely bioengineered seeds and pesticides — led the way in the quarter, with revenues that constituted 37% of the total and expanded by 7%. But as I noted at the time, the performance chemicals segment saw its revenue dip by 15% and its operating earnings plunge by 56%.

Kuhlman et al. noted unequivocally at release time that they’d be better off without performance chemicals, which was hit hardest by excessive capacity and low prices for titanium dioxide, a whitening agent used in a host of products. A figurative “for sale” sign has clearly been placed in front of the unit, with the notion that it’d fetch about $10 billion, potentially from one of Carlyle Group LP (NASDAQ:CG)’s private equity brethren.

It’s noteworthy, however, that E I Du Pont De Nemours And Co (NYSE:DD)’s isn’t the only titanium dioxide unit on the market. Huntsman Corporation (NYSE:HUN), which also manufactures the agent, will similarly be vying for buyers’ attention for its own operation.

A brightening in darkest Africa

Back on the debit side of the ledger, soon after announcing its second-quarter results, DuPont told us that, following a three-year struggle, it had completed the acquisition of South Africa’s Pannar Seed. The purchase, which was first announced in September 2010, obviously will further expand agriculture’s base at the company. And with it (and assuming that performance chemicals is jettisoned), I’m projecting that the three-segment agriculture- and food-related group will easily account for as much as 75% of total revenues by the end of 2015.

Let’s look at what all this means to likely sources of the company’s revenues in the not-too-distant future. In the most recent quarter, agriculture and its related segments accounted for nearly 49% of E I Du Pont De Nemours And Co (NYSE:DD)’s total sales. Where I went to school, that’s about half. But had performance chemicals been unloaded before June 30, agriculture, biosciences, and nutrition would have been responsible for nearly 60% of the total.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

The 10 Most Peaceful Countries in the World

5 Big Reasons Communism Failed

The 15 Most Famous Carl Icahn Quotes

10 Scary Animals that are Actually Harmless

The 8 Most Famous Singer-Actors in Entertainment

The 10 Longest Wars of All Time

The 13 Worst Looking Foods that Taste Great

The 6 Most Gruesome Injuries Suffered During a Sports Match

The 20 Biggest Contracts in MLB History

The 7 Worst Blown Calls in Sports History

7 Free Ways to Advertise Your Business Online

The 18 Best R&B Songs of the 90’s

The 10 Most Dangerous States to be a Cop

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!