Morningstar | DowDuPont Will Spin Off Corteva in June to Complete Its Separation Into Three Businesses
Dow Chemical and DuPont completed a merger of equals in August 2017. The new company, named DowDuPont, has begun to split into three separate companies--one company each in agriculture, materials science, and specialty products. The materials science company, named Dow spun off from DowDuPont in April. The agriculture company, named Corteva Agriscience, will spin off in June. At that point, DowDuPont, which will hold only the specialty products company, will be renamed DuPont.DowDuPont’s portfolio is split between specialty chemicals and agriculture. The company’s advanced materials business coming from the DuPont side has produced some noteworthy (and high-profit) products over the years. The company invented products such as Lycra and Kevlar, which have wide applications in textiles and safety equipment. Teflon, which is used in nonstick cookware, and Tyvek, broadly used in construction materials, also demonstrate DuPont's successful product development and innovation. The company has a solid record of innovation, and we think it will be able to replace earnings from older products as they fall out of favor or are leapfrogged by new technologies, and as patents expire.The agriculture business is a leader in the development of new seed and crop chemicals products. Corteva's product portfolio skews toward seeds, which generated 56% of revenue in 2018. Corteva develops its pipeline through the investment of nearly 11% of sales, which is at the top end of all ag competitors. This investment to develop new products should allow Corteva's sales and profits to continue to grow even as patents expire and generic products come to market.DowDuPont is a holding company comprised of The Dow Chemical Company and E. I. du Pont de Nemours and Company with a focus on forming independent, publicly traded companies in the agriculture and specialty products sectors. The company's worldwide operations are managed through global businesses and include the following reportable segments: Agriculture; Electronics and Imaging; Nutrition and Biosciences; Transportation and Advanced Polymers; and Safety and Construction.
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