DuPont Plans to Sell 80% Stake in Delrin® Division to TJC

DuPont has unveiled a significant development by entering into a definitive agreement with TJC LP (TJC) to divest an impressive 80.1% ownership stake in the Delrin® acetal homopolymer (H-POM) business. This strategic maneuver brings about a valuation of a substantial $1.8 billion for the Delrin business, signifying a substantial step forward for both parties involved.

To enable the transaction, TJC has taken decisive steps to secure fully committed financing, underscoring its resolute commitment to the acquisition. The anticipated completion of the deal is projected to occur around the conclusion of the year 2023, contingent upon fulfilling customary closing conditions and regulatory approvals.

The financial implications of this agreement are indeed striking. As the transaction reaches its conclusion, DuPont stands to receive pre-tax cash proceeds amounting to roughly $1.25 billion. Naturally, this amount is subject to the customary transaction adjustments inherent in such proceedings. Moreover, DuPont will hold a $350 million note receivable. What's particularly noteworthy is that post-transaction, DuPont will retain a non-controlling common equity interest of 19.9% in the Delrin business. This multifaceted financial arrangement has been deliberately structured to optimize value for DuPont's shareholders.

Expressing his perspective on the matter, Ed Breen, the Executive Chairman and Chief Executive Officer of DuPont, articulated, “Today’s announcement largely completes our planned exit of the former M&M segment, advancing our position as a premier multi-industrial company.” Breen emphasized the strategic forethought underlying this transaction, asserting that it stands to infuse substantial cash resources that can be prudently directed in alignment with the company’s strategic priorities. Additionally, he underscored the potential for DuPont to reap benefits from any forthcoming positive developments through its retained equity interest in the Delrin business.

Breen also highlighted the exciting prospects stemming from the partnership with TJC, commending the latter’s track record of value generation through a keen operational focus. He expressed his unwavering confidence in TJC’s capability to cultivate growth and opportunities, benefiting both employees and customers associated with the Delrin business.

Ian Arons, a Partner at TJC, echoed this sentiment, placing emphasis on Delrin's recognized status as the preferred material in safety-critical applications across diverse markets. Arons celebrated the Delrin business's consistent dedication to delivering innovative solutions and leveraging its cutting-edge technologies and global manufacturing presence spanning over six decades. The partnership with DuPont was acknowledged as a promising facet of this venture, poised to enable synergistic efforts in propelling the future expansion of the Delrin business.

Notably, the financial outlook outlined in the news content stipulates that the financial results of the Delrin business will continue to be classified as discontinued operations in DuPont’s consolidated financial statements until the transaction concludes.

To navigate the intricacies of this transaction, DuPont has enlisted the expertise of Goldman Sachs & Co. LLC as its financial advisor, complemented by legal counsel from Skadden, Arps, Slate, Meagher & Flom LLP. On the other side of the equation, TJC has engaged Citi as its financial advisor and secured the services of legal counsel from Kirkland & Ellis LLP.

In summation, the DuPont-TJC deal pertaining to the Delrin business underscores DuPont's strategic prowess in optimizing its positioning. With a multifaceted financial framework and a promising collaboration in place, both entities are poised to leverage the strengths of the Delrin business, steering its growth in the foreseeable future.