DuPont (
DD)
unveiled the future board of directors at its performance chemicals spinoff, Chemour, earlier this week and poor Nelson Peltz didn’t make the cut here either. Surprisingly, the media isn’t covering this board situation in the same manner as last week’s ‘historic’ proxy battle, which witnessed DuPont CEO Ellen Kullman
take down Nelson Peltz’s Trian Fund at the ballot box. The highly condensed story is that Nelson Peltz’s Trian Fund has been a DuPont shareholder for several years and was trying to get a seat on the board for himself and a few friends in order to push his ideas.
Initially it was a breakup of the company, but more recently the focus was on slashing wasteful spending and improving profitability. Instead of cutting a deal as many other companies have done, Ms. Kullman opted to go to war and in a very closely watched and intense battle, prevailed over the activist. Despite not having the support of the proxy advisory services, management was able to sway the big passive shareholders and also win the retail vote. Opinions vary whether this was a watershed moment
for standing up to activists or just a one off victory and not meaning much. Surprisingly similar to the discussions post Jana/Agrium and after every other big win or loss by activists.
Regardless of the larger meaning (if any), the vote is a shareholder stamp of approval for Ms. Kullman’s vision for the future and that includes shedding slower growth and highly cyclical businesses such as performance chemicals. The new DuPont will focus on businesses like nutrition and agriculture which (at least for now) have higher growth and higher margins. Progress continues to be made on the separation, including the aforementioned creation of a BOD. Mark Vergnano, future Chemour CEO and President will be a director at the company. The new company, which will trade under the ticker ‘CC’, recently set up its credit facilities and completed a notes offering. For more information, check out the most recent Form 10 filing here.
The spin should continue to make headway unobstructed now, but Ms. Kullman shouldn’t get too comfortable at the wheel as Mr. Peltz promises to be watching and waiting. Although he may have lost this battle, it sounds like the war may not be over.
Disclosure: Author holds no position in any stock mentioned.