DowDuPont Spells Out Details of Material Sciences Spin-Off

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DowDuPont Inc. (NYSE: DWDP) confirmed Friday morning that its intended division into three separate companies is going ahead as planned. The first division to be hived off is the material division, which will become the new Dow Inc. on April 1.

Current DowDuPont shareholders will receive a pro rata dividend for each existing share of stock they own, payable on April 1 to shareholders of record on March 21. The dividend payment equals one share of stock in the new Dow for each DowDuPont share held on the record date.

On April 2, Dow will trade on the New York Stock Exchange under the ticker symbol DOW. Prior to that, on March 20, DowDuPont expects to begin trading “when-issued” shares under the ticker symbol DOW WI. Jim Fitterling, chief operating officer of the current materials sciences division, has been named as the chief executive officer of the new Dow.

Until April 2, DowDuPont shares will trade “regular way” under the current ticker symbol, including the right to receive shares in the new Dow. The “when-issued” shares also will trade in an ex-distribution market under the ticker symbol DWDP WI that excludes the right to receive shares in the new Dow. Regular-way shares sold prior to the April 1 distribution date will receive no shares in Dow.

DowDuPont announced last November that the agricultural division and the specialty products division will be spun-out on June 1, 2019, as Corteva and DuPont, respectively. CEO Ed Breen commented:

Today’s announcement marks a major milestone toward successfully separating Dow on April 1, to be followed by the expected separation of Corteva Agriscience™ from the new DuPont on June 1. We believe that each of the intended three independent companies is set to be an industry leader with the right management and capital structure to better serve customers, compete in their end markets and focus on their innovation priorities.

Nomura analyst Aleksey Yefremov estimates the Dow’s free cash flow will be about $4 billion in 2020, according to a report at Barron’s. He values the company at around $54 billion, including debt. He also placed a value on the new DuPont and Corteva of about $62 billion and nearly $30 billion, respectively.

DowDuPont shares traded up about 1.4% in Friday’s premarket, at $55.28 in a 52-week range of $48.89 to $73.23. The stock trades at around the same level as in September 2016, after reaching a peak of around $77 in January 2018.

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