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Yesterday, 12:58 PM
- The proposed merger of Dow Chemical (DOW -0.1%) and DuPont (DD -0.3%), which prompted an upgrade at Bernstein a month ago, is now the subject of a more critical review at the firm, which calls the current merger structure "sub-optimal."
- The current structure will create three problems, the firm says: the $4B in synergies the companies have guided are unrealistic; Dow would remain an integrated commodity/specialty player - which the firm sees historically as one of the company's main impediments - DuPont's culture issues would not be resolved; and the DuPont-dominated "specialty products" business would be a shadow of DuPont, "basically waiting to be carved up and sold."
- Bernstein believes the Dow-DuPont split-up plan should be revised to form three focused agriculture, commodity and specialty chemicals businesses which would enable the resolution of the integrated structure at Dow, the muddled structure and diffuse accountability at DuPont, while also significantly increasing both cost and growth synergies.
- Dow is rated Outperform with a $64 price target; DD also is rated Outperform, with an $81 target.
Mon, Feb. 8, 3:14 PM
- Dow Chemical (DOW -2.1%) is upgraded to Positive from Neutral with a $54 price target, up from $46, at Susquehanna, even after rising nearly 12% in the past week.
- The firm says it remains positive on the combined company's agriculture segment given Dow and DuPont's (DD -2.6%) pursuit of cost reductions in ag prior to the H2 2016 merger closure, and its expectation of $1.25B of cost (primarily R&D) and $500M of growth synergies.
- The firm says it completed a revised valuation, changing the approach to now "apply the equity ratio to the pro-forma capital structure resulting in a 50/50 split," taking into consideration the Dow-DuPont combined entity.
- DuPont already had been rated Positive by Susquehanna, but now with a lowered price target of $69 from $77.
Tue, Feb. 2, 10:58 AM
- Dow Chemical (NYSE:DOW) CEO Andrew Liveris will leave the company after the completion of its merger with DuPont (NYSE:DD), he says during the company's earnings conference call.
- The move would mark a victory for Dan Loeb, who had called for his removal.
- Earlier: Dow Chemical beats estimates as cost cuts pay off
- DOW +2.8%, DD +2.4%.
Thu, Jan. 28, 6:43 PM
- DuPont (NYSE:DD) will face 40 trials/year beginning in April 2017 involving plaintiffs who say they developed cancer from a toxic chemical used to make Teflon that leaked from one of the company’s plants in West Virginia, Reuters reports.
- The schedule determined by a U.S. district judge in Ohio during a hearing yesterday is aimed at pushing the parties closer to resolving more than 3,550 lawsuits, which center on claims DuPont used perfluorooctanoic acid, or C-8 at a West Virginia plant for decades despite knowing it was toxic and had been found in nearby drinking water.
- The outcome could have a material impact on Chemours (NYSE:CC), since liability for litigation connected with C-8 was passed on to the firm that was spun off by DuPont last year.
Tue, Jan. 26, 3:48 PM
- DuPont (DD +0.8%) says it now plans to cut $730M in expenses this year, up from its December projection of $700M in cost reductions amid a broad restructuring plan to eliminate ~5K jobs in an effort to improve profits and hasten integration with Dow Chemical (DOW +0.7%), company execs said in today's earnings conference call.
- "The big takeaway today is the pace of change that's happening at this company," says Edward Jones analyst Matt Arnold, who expects the cost cuts to continue and considers the current reductions just a starting point.
- CEO Edward Breen says there is "very little" to concern regulators about the company's pending merger with Dow and that it is unlikely to need to make significant asset sales, despite analyst speculation that the deal will face intense regulatory scrutiny.
- "We feel there is very little overlap, despite the size of the companies," Breen reiterates in a telephone interview with Reuters.
Tue, Jan. 26, 7:53 AM
Tue, Jan. 26, 7:21 AM
- Operating earnings of $239M, or $0.27 a share vs. $519M, or $0.57 per share in the same quarter a year ago.
- Net sales fell 9.4% to $5.3B, as the company battled the effects of a strong dollar and weak demand for its agriculture products.
- Completed a $2B accelerated share repurchase program; announced a first quarter dividend of $0.38 per share.
- "Difficult global economic conditions in agriculture and slower growth in emerging markets are expected to continue, challenging the company's sales growth in 2016."
- As a result, operating earnings per share for the current year is expected to be between $2.95 and $3.10.
- Q4 results
Tue, Jan. 26, 6:23 AM
Mon, Jan. 25, 5:30 PM
Fri, Jan. 22, 7:11 PM
- Few catalysts remain on the horizon to boost Dow Chemical (NYSE:DOW), especially as the merger with DuPont (NYSE:DD) and eventual split could take up to three years, says Citigroup’s P.J. Juvekar, who rates DOW at Neutral with a $45 price target.
- Even with the recent market selloff, Juvekar sees no near-term catalysts to push the stock, and weakness in oil prices and the Chinese economy are likely to persist throughout the year.
- The merger is expected to close in H2 2016 while the eventual split into three parts could take an additional 18-24 months - "a long time for investors to wait, as Dow’s fortunes are now tied to DD’s results, particularly in ag" Juvekar writes, adding that LyondellBasell (NYSE:LYB) is better positioned to benefit from a rebound in oil prices.
Fri, Jan. 8, 8:44 AM
- DuPont (NYSE:DD) +1.1% premarket after Bernstein upgrades shares to Outperform from Market Perform with an $81 price target, raised from $71, saying that although the structure of the merger with Dow Chemical (NYSE:DOW) could have been better and unlocked more value, it will still provide significant upside to both companies.
- Bernstein also sees additional upside from ethylene shortages, regardless of crude oil prices, as well as the possibility of an improved deal structure.
- Earlier: DuPont, Air Products downgraded at Citi; Celanese, Eastman upped to Buy (Jan. 5)
Tue, Jan. 5, 11:58 AM
- DuPont (DD +0.7%) is downgraded to Neutral from Buy at Citigroup following its ~30% rally into year-end since bottoming out in September as new CEO Ed Breen took over and expectations were high, but the firm says ag is weak and DuPont has several company-specific challenges (also).
- Citi also downgrades Air Products & Chemicals (APD -2.2%) to Neutral from Buy, believing APD's initial restructuring and cost cuts and the materials technologies spinoff are all factored in.
- At the same time, Citi upgrades Celanese (CE +0.4%) and Eastman Chemical (EMN -0.1%) to Buy, citing Celanese CEO Mark Rohr's clear vision presented at the company's analyst day and EMN's ill-timed propane hedges which are now factored in the stock price.
Tue, Jan. 5, 7:28 AM
Dec. 29, 2015, 12:18 PM
- CEO Ed Breen disclosed in an employee memo DuPont (DD +1.7%) plans to lay off 1,700 of its 6,100 Delaware employees in early 2016. No local facilities will be shuttered. Breen: "The effect in Delaware will be significant, reflecting the urgent need to restructure our cost base and, as part of that effort, reduce our corporate overhead costs so that we can remain competitive."
- DuPont also states its Specialty Products business, one of three publicly-traded companies to exist after the Dow Chemical (DOW +0.4%) deal closes, will be headquartered in Wilmington.
- In tandem with the Dec. 11 Dow Chemical merger announcement, DuPont stated it planned to cut its 63K-strong global workforce by 10%. $700M/year in cost savings are sought.
- Both DuPont and Dow are higher on a day the S&P is up 0.9%. Dow's gains are limited by the fact the company is trading ex-dividend today.
- Prior DuPont/Dow Chemical coverage
Dec. 22, 2015, 5:35 PM
- The combined DuPont (NYSE:DD) and Dow Chemical (NYSE:DOW) will cut costs more than the companies officially project - as high as $5.1B-$6.1B vs. the announced $3B - Alembic Global Advisors’ Hassan Ahmed says.
- Using a sum-of-the-parts valuation for both Dow and DuPont and layering on the valuation impact of cost synergies and growth projects points to ~40% upside from current levels for the merged company’s enterprise value, Ahmed calculates.
- The merged company currently trades at an EV-to-EBITDA of 5.6x vs. the typical U.S. specialty chemical company multiples of 10x-12x, according to Ahmed, and he considers his analysis conservative since it does not bake in an ethylene up-cycle or growth synergies.
Dec. 18, 2015, 12:17 PM
- Interim Syngenta (SYT +2.1%) CEO John Ramsay tells Dow Jones the company is discussing possible deals with "a number of parties" and is open to combinations with companies including Monsanto (MON +0.9%).
- While Ramsay says MON has not revived its $46B takeover effort that was abandoned in August, his comment that SYT is "interested in any value-adding opportunity that exists for us in this industry, which includes Monsanto and many others" marks a notable departure from its earlier stand.
- Last week's merger between DuPont (DD -0.7%) and Dow Chemical (DOW -0.4%) removed two potential partners for SYT and eventually could pose a greater competitive threat in the ~$100B global seed and pesticide industry.
E I du Pont de Nemours & Company is a science and technology based company. It offers products and patents applications for agriculture, nutrition, electronics and communications, safety and protection, home and construction, transportation and others.
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