Dupont to Spin Out $1.5 Billion Water Tech Business

Chemicals and materials conglomerate DuPont de Nemours Inc. will spin off its water business as part of a broader plan to split into three companies.

The water treatment group now under DuPont’s umbrella last year generated about $1.5 billion in sales and had operating EBITDA margins of roughly 24%. It is home to the Amberlite, FilmTec, Fortilife, Integraflux and TapTec brands that are marketed to industrial, energy, life sciences and municipal customers as well as consumers. About half of its revenues come from industrial and energy companies, with the municipal/desalination and life sciences/specialty markets each accounting for about a fifth of sales.

“This is an extraordinary opportunity to deliver long-term, sustainable shareholder value through the creation of three strong, industry-leading companies,” Ed Breen, DuPont’s executive chairman and CEO, said in a statement. “Critically, each company will have greater flexibility to pursue their own focused growth strategies, including portfolio-enhancing M&A.”

The spinoff process is expected to take 18 to 24 months and cost DuPont about $700 million. Executives also said they expect to spend about $60 million to properly build out the separate management teams at each business.

As an independent company, DuPont’s water division—a name and leadership team will be announced later—will compete with Xylem Inc. and Veralto Corp., among others. Both of those businesses are quite a bit larger, with 2023 revenues of $7.4 billion and $5.0 billion, respectively.

That disparity prompted several analyst questions on a May 23 conference call about a possible outright sale of DuPont’s water group. Breen, who noted that he expects the water business to grow by mid-single digit percentage points for the foreseeable future, said the DuPont board did not run a sales process alongside its exploration of the three-way split but added that his team would listen to inquiries about a sale over a spinoff.

In addition to spinning out its water group, DuPont’s leadership team also plans to separate the company’s roughly $4 billion electronics division, which focuses on semiconductors, circuit boards and heat management components. The company’s plan will also create a “New DuPont” focused on the healthcare, advanced mobility and safety/protection markets.