Trian Fund Management LP, the hedge fund co-founded by activist investor Nelson Peltz, acquired a 0.6 percent stake in DuPont Co. (DD:US) as the chemical maker considers options for one of its more volatile businesses.
Trian held 5.78 million shares of DuPont as of June 30, the New York-based fund said in a regulatory filing yesterday. The shares give Trian a stake worth about $343 million at yesterday’s closing price. DuPont, based in Wilmington, Delaware, is the largest U.S. chemical maker by market capitalization.
Trian was first reported by CNBC to have “a very big” stake in DuPont on July 17. DuPont subsequently announced it’s exploring options for its performance-chemicals unit, which makes titanium dioxide pigment, Teflon coatings, Freon refrigerants and chemicals such as cyanide. The company this week changed its bylaws to provide payouts to executives fired in a takeover and to alter how special meetings are run.
“We will evaluate any ideas Trian may have in the context of our ongoing initiatives to build a higher value, higher-growth company for our shareholders,” Michael Hanretta, a DuPont spokesman, said in an e-mail yesterday. “We routinely engage with our shareholders and welcome constructive input.”
DuPont, which produces thousands of products such as Kevlar anti-ballistic fiber and genetically modified corn, is weighing a separation of performance chemicals after the unit’s operating profit plunged 56 percent in the second quarter amid a slump in prices for titanium dioxide, a white pigment used in paints and plastics. Before jumping on CNBC’s July report, DuPont shares had gained 30 percent in the past decade (DD:US), trailing the Dow Jones Industrial Average’s 70 percent increase.
Chairman and Chief Executive Officer Ellen Kullman said in an interview last month that she hasn’t spoken to Peltz and that he wasn’t the impetus for DuPont disclosing its plan for performance chemicals, which had been considered for months.
Trian successfully pushed Ingersoll-Rand Plc to spin off units last year. Peltz also is pressuring PepsiCo Inc., the world’s largest snack-food maker and second-biggest soda producer, to acquire competitor Mondelez International Inc., formerly known as Kraft Foods Inc. In 2006, Trian waged a six-month proxy fight with H.J. Heinz Co. to win seats on the board and persuade management to execute a turnaround plan.
During the second quarter, Trian also acquired almost 2.1 million shares of Sotheby’s, the New York-based auction house, with a market value of $78.6 million as of June 30, according to the Form 13F. The fund also bought 776,898 Class A shares of GNC Holdings Inc. and raised its stake in Lazard Ltd. (LAZ:US) to 6.7 million shares (LAZ:US) at the end of June from 5.6 million at the end of March.
Kullman, under the company’s newly amended bylaws, would receive three times her annual salary and bonus if fired after a company takeover and other executives would get twice their compensation. New bylaws also require advance notice for nominating directors or proposing other changes and set Delaware as the jurisdiction for resolving fiduciary duty and shareholder rights disputes.
Under Kullman’s leadership since 2009, DuPont has continued to shift away from traditional commodity products toward higher-margin businesses that capitalize on meeting global demand for food, energy and security. DuPont sold its auto-paint unit this year to private-equity firm Carlyle Group LP for $4.9 billion, and it acquired food ingredients and enzyme maker Danisco A/S in 2011 for about 33.4 billion kroner ($5.9 billion).
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