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Breakingviews: Fireworks at DuPont

Tuesday, September 23, 2014 - 03:03

Rob Cox discusses his column on the battle brewing between Nelson Peltz and one of America's most venerable companies.

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Nelson Peltz is. Gone right at DuPont with a big act this battle there and in the middle of the whole thing is is very bizarre. And quirky kind of thing called stranded costs that seems to be working its way in the in this -- -- of the -- try to pick apart a little. But also it's -- last week Nelson Peltz is trying fund manager came out with its white papers 35 page. Document that -- basically explains what. -- -- due to double its stock price in the next few years that includes splitting into it includes getting rid of what they call. -- calls. Four billion dollars an excess of corporate costs this is the instinct and so. Straight Acosta is like a weird concept and they utility industries are when you invest in something it's now redundant for -- purposes -- competitive purposes or. Regulatory purposes but it sort of has now sort of taken on new. And it's been out there you know they talk to this but basically one of the main charges that -- makes -- he looks at the divestiture accompanied coatings business. To Carlyle two years three years ago in 2000 and that figure -- public sort of good analogy now that don't Carrasco Republican and what you have this is discrepancy between the reportedly picked up the time. Which was 339. Million and now we -- obviously without that senior a 568 so it to a thirty million dollar delta. That is this that and that effectively was. Corporate cost that we're charged back to corporate center. That were well charger yeah it -- that there were corporate center costs that were up put on the division. And so the point Peltz is making it quite rightly is wait a second. You have these kinds of corporate cost that are being shunted on to the operating businesses are as to why do you have these costs why they exist now the question as he's done -- sort of extrapolation -- out in a couple different ways but. I mean so you your face literally -- out -- well I think I think it's he's raised the right question which is okay so it's -- that this is the this is the cost for the for this division. Relative to the corporate costs. Therefore by extrapolate based on the percentage in this jobs whatever and and I extrapolate I can come EF two different -- that he does it matter what the details in the column. But basically anywhere from. Two to four billion dollars at the extra cost which you know if you were to strip it out put the bottom line. You're talking about a huge uplift and got Groupon has not yet responded and now we've -- he says they have not come out in in detail on and and given a full -- response to Nelson Peltz. But going back and -- some of the transcripts that the CFO and from that can sit down with some of the shareholders. It's clear that they've been grappling with this issue somewhat internally. So after they got and coatings business for instance that's 130 million dollars they recognize that they had this that they they said he got rid of it within a year. But of course it gets great raises the question. Why you have in the first breast exam and I think that's really where we're Peltz and -- this are always last on the summit will keep an app for the responsibly back were breaking news tomorrow.

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Breakingviews: Fireworks at DuPont

Tuesday, September 23, 2014 - 03:03