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DuPont CEO’s departure sets off debate over possible split

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A board member known for his experience in breaking up companies has taken over as DuPont Co. CEO Ellen Kullman prepares to leave the company on Oct. 16, fueling speculation of a company breakup and a ramp-up of job cuts, multiple news outlets report.


Johnston-based DuPont Pioneer –  which has quietly been cutting positions, revamping its information technology functions and changing leadership – is firmly in the middle of that debate. The company is one of Central Iowa’s top employers and is widely viewed as one of DuPont’s most lucrative operations.


Edward Breen, a member of DuPont’s board of directors who once oversaw the breakup of diversified manufacturer Tyco International, will take over as interim chairman and CEO while the board searches for a full-time replacement.


The Des Moines Register reported that industry chat about a split intensified as DuPont’s stock initially rose 7.7 percent on the news that Kullman, a three-decade DuPont veteran, would retire after a nasty fight with activist investor Nelson Peltz, co-founder of Trian Fund Management. It was the biggest one-day gain since 2009, but DuPont’s stock was still down 21 percent for year.


Even though Kullman fought off Peltz’s attempt to win board seats and force changes in company operations, DuPont’s performance lagged and Kullman abruptly announced her departure.


“The buzz is definitely all about (a possible split),” Matt Arnold, a St. Louis-based analyst at Edward D. Jones & Co., told the Register. “That’s why the stock is up so much today. There are people that obviously see value in it, and they are buying the shares because they see a breakup as being a catalyst.”


Agriculture accounted for about a third of DuPont’s $35 billion in sales last year.


Chad Hart, an agricultural economist at Iowa State University, told the Register that DuPont leaders will have to assess whether the “pieces are worth more than the sum total.”


Pioneer, purchased by DuPont in 1999, has been an important Iowa company since agriculture pioneer Henry A. Wallace founded it in 1926. It employs 3,400 Iowans, many of whom live in the Des Moines area.


A huge drop in corn prices has pressured many agricultural companies to cut expenses. Farm income is expected to fall to $58.3 billion this year from $91.1 billion a year ago, according to the U.S. Department of Agriculture.


Kullman had blamed much of the stock price drop on global markets, including a rising dollar, but some investors had already grown restless with her leadership, complaining that she was not fully executing on the changes she initiated,Reuters reported. But analysts said investors had grown impatient with her and called for more cuts. Breen’s history of breaking Tyco into six companies should help keep Peltz at bay for a few months, they added.


“I tell clients that even if you win a proxy fight, activists aren’t necessarily going to go away. You can win the battle but still lose the war,” said Chris Young, head of takeover defense practice at Credit Suisse.


The Wall Street Journal reported that Deutsche Bank analysts view a breakup as “highly likely” because Kullman was viewed as “the single biggest impediment, in our view, to a breakup of DuPont.”

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