EUR 442.45 For Business Accounts Only

Updated Valuations for Industrial Giant's Upcoming Spinoffs

What's Happening with DWDP?
On August 31, 2017, E.I. du Pont de Nemours & Co. (DD) and Dow Chemicals Co. (DOW) merged to form DowDuPont, Inc (DWDP). Following the merger, DWDP announced its intent to complete the three-way break-up of the company by Spinoff within 18-24 months from the date of merger. Dow shareholders received a fixed exchange ratio of 1.00 share of DowDuPont for each Dow share owned at the time of the merger, and DuPont shareholders received a fixed exchange ratio of 1.282 shares of DowDuPont for each DuPont share owned.

New Company Structures...
DWDP is preparing for its planned break-up into three separate companies:
New DuPont (Specialty Products, Parent ex-Spins), which will be comprised of four operating business segments: a) Transportation & Advanced Polymers (T&AP), b) Electronics & Imaging (E&I), c) Safety & Construction (S&C) and d) Nutrition & Biosciences (N&B);
Dow Holdings, Inc. (Material Sciences, Spinoff 1), which will be comprised of three operating business segments: a) Packaging & Specialty (P&SP), b) Industrial Intermediates & Infrastructure (II&I) and c) Performance Materials & Coatings (PM&C);
Corteva, Inc. (Agriculture, Spinoff 2), which will be comprised of two operating business segments: a) Seed and b) Crop Protection;

What's Interesting? The Edge Ingredients...
Experienced Leadership Team: Marc Doyle, the current COO of the Specialty Products business (joined DuPont in 1995), will become CEO of New DuPont (Specialty Products, Parent ex-Spins). Jim Fitterling, the current COO of the Materials Science business (joined Dow in 1984), will become CEO of Dow Holdings, Inc. (Material Sciences, Spinoff 1). James C. Collins, the current COO of the Agriculture business (joined DuPont in 1984), will become the CEO of Corteva, Inc. (Agriculture, Spinoff 2). Edward Breen, the current CEO of DWDP, who we believe is a Spinoff specialist and has generated a huge shareholder value in his previous company (Tyco), will become the Exec. Chairman of New DuPont following the second Spinoff in June 2019.

Insider Buys Pre-Spin: On August 8, 2018, Ed Breen bought shares in the open market for the very first time in DWDP, buying 29,580 shares @ $67.61. This totalled close to $2 million spent and was an +8% increase, bringing his total to 364,232 shares of DWDP. The last insider purchase since the Dow Chemical and DuPont merged came from Dennis Reilley (Director), who bought twice – once on October 18, 2017 (270 shares) and again on October 24, 2017 (15 shares) around the $70 mark, spending in total $20K.

Share Price Weakness Creates a Buying Opportunity: Anticipated industry weakness in Corteva, Inc. (Agriculture, Spinoff 1) after its prospectus filing on September 18, 2018, coupled with the recent equity market selling pressure, have resulted in a decline in DWDP’s share price. Since the completion of its merger to date, DWDP has shown a total shareholder return (TSR) of -10.6%, underperforming the S&P 500 Index’s TSR of +10.2% and the TSR of its peers like Honeywell International, Inc.’s (HON, +11.8%), 3M Co. (MMM, -0.1%), LyondellBasell Industries N.V. (LYB, +4.7%), and Johnson Controls International Plc (JCI, -8.2%).