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

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Click here to Read Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 74 percentage points in 2.5 years. Our beta is only 1.2 (download a FREE newsletter and see the details inside)

Lists

Best Selling Magazines in the World

Shortest People in History

The Most Celebrated Holidays in the World

Most Expensive Handbag Brands in the World

Top Selling Comic Book Issues of this Century

The Most Powerful Women in Politics

Best Paid DJs

Most Rebellious Female Artists

Best Paid TV Actresses of 2014

Best Paid Actors of 2014

Most Expensive Horses in the World

Tallest People Ever

Most Encouraging Feminist Celebrities

Best Paid Supermodels of 2014

Top 10 Suburbs for Retirement in 2015

10 Wealthiest Cities in America

Top 10 TED Talks for Entrepreneurs

Best TED Talks on Education

25 Most Dangerous Places to Live in America

Top 10 Ski Resorts in the United States – 2014 List

Top 10 Most Remote Places in the World

Most Visited Museums in the United States

Wealthiest Photographers in the World

Most Famous Gay Athletes

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

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 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!