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DuPont sells its Coatings Business to Carlyle for $4.9 billion

Carlyle targets emerging markets with DuPont Performance Coatings 

DuPont and The Carlyle Group (Carlyle) signed a definitive agreement by which Carlyle will buy DuPont Performance Coatings (DPC), the DuPont’s Coatings Division.

Still submitted to regulatory approval, the transaction should be effective on the first quarter 2013.

Carlyle is a global alternative assets manager having already major interests in the industry and automotive sectors.

In previous years Carlyle took over companies such as Allison Transmission, Hertz and PQ Corporation.

These last months Carlyle signed commitments to acquire Hamilton Sundstrant Industrial, Sunoco’s Philadelphia refinery and the rail freight transportation company Genesee & Wyoming.  

Founded by Carlyle Partners V and Carlyle Europe Partners III ‘s equities, the $4.9 billion transaction will be paid to DuPont in cash.

Carlyle recognizes in DuPont Performances Coatings a: “successful business with attractive market positions, next-generation technology and established brands“.

Within DuPont, the DuPont Performance Coatings business is a global player in advanced coatings for the automotive and industrial applications expected to book $4 billion revenues in 2012 with 11,000 employees.

DuPont Performance Coatings covers four market segments:

 – Refinishing

 – Original Equipment Manufacturers (OEMs)

 – Industrial liquid

 – Powder

DuPont Performance Coatings operates production units in six continents to serve 120 countries directly or through 4,000 distributors.

While having already a technology-based Market Leadership in industry and automotive, Carlyle foresees more opportunities in emerging countries such as China and Brazil.

To be managed as a stand-alone company, Carlyle is planning to develop DuPont Performance Coatings with dedicated investments concentrated on selected targets with high potential for growth.

These last years this Coatings Division delivered to DuPont constant growth and solid results from which Carlyle identified the potential for further growth in new territories. 

DuPont to focus on sciences and biotechnologies

On DuPont’s side, the decision to spin off DuPont Performance Coatings is justified by its strategic choice to focus on different markets from industry and automotive, such as:

 – Agriculture and nutrition

 – Advanced materials

 – Biotechnologies

 In that respect DuPont will continue to supply the automotive industry with high added value products representing a total of $3 billion revenues as for example:

 – Environmentally friendly refrigerants

 – Bio-based materials for seats and headliners

 – Next generation of bio-fuels

While 200 years old, DuPont has always been driven by innovation and science to develop thousands of new patents and products for all markets, food industry, chemicals, electronics, automotive, home, protection and safety, construction.

DuPont generates and manages innovation in co-operation with its customers, Governments and NGOs to anticipate on future challenges.

In the perspective of a global population to reach nine million inhabitants by 2050, DuPont identified the most critical challenges to come ahead of us as:

 – Healthy food available everywhere

 – Fossil fuel reliance

 – Environment and people protection

Therefore DuPont‘s strategy is to focus on:

 – Food

 – Energy

 – Protection

In food, DuPont provides crop protection, nutrition ingredients and food safety.

In energy, DuPont produces multiple materials to save energy in building and construction and invests heavily in solar technologies.

In protection, DuPont develops all the solutions to protect the industrial workers, law enforcement and military forces, as well as for good health against diseases.

All these three sectors require from DuPont significant amounts of capital expenditure to sustain Market Leadership by innovation and science for which the cash coming from DuPont Performance Coatings is necessary and is likely to provide high return. 

In this context, DuPont Performances Coatings had less coherence with the overall DuPont’s strategy while it still can carry on an excellent opportunity for growth, profits and global Market Leadership at Carlyle‘s benefit. 

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