DuPont’s sale of its DuPont Performance Coatings (DPC) business to global alternative asset manager The Carlyle Group for $4.9 billion is expected to close during the first quarter of 2013.
DuPont will continue to generate roughly $3 billion through products provided to the automotive industry—such as advanced materials for light-weighting vehicles, refrigerants, bio-based fabrics and headliners, and biofuels. But this transaction is significant because it marks the end of DuPont’s involvement in the automotive refinish industry.
Executives of DuPont, a company that earned $38 billion in 2011, say the sale was meant to allow the company to focus on other strategic core market segments, including agriculture, nutrition, biotechnology and other advanced materials—which “represent high-growth, high-margin opportunities.”
Michael Bennett, North American marketing manager for Wilmington, Del.-based DPC, says DuPont did not consider paint as part of the company’s long-term focus and direction. DuPont believes that DPC—which is expected to earn more than $4 billion in 2012—would have a better
opportunity to grow by becoming a stand-alone operation.
—Michael Bennett, North American marketing manager, DuPont Performance Coatings
“DuPont Performance Coatings is a leader in the automotive and industrial coatings sectors with world-class products and customer service. The company continues to grow and deliver solid results,” says Ellen Kullman, chair and CEO of DuPont. “After careful review, we have determined that DPC’s full growth potential would be best realized outside DuPont and through the sale to Carlyle.”
Bennett says that’s because DPC’s costs for corporate initiatives will change as it becomes a stand-alone company. Currently, a portion of DPC’s profits go to corporate DuPont to fund the parent company’s strategic goals—many of which fall outside of DPC’s service offerings. But after the transaction, Bennett says all of the profit that DPC generates will be “funneled back into the business to help us and our customers grow.”
“Being part of DuPont, much of DPC’s profit was focused on assisting DuPont to grow in its strategic direction,” Bennett says. “This move allows DuPont to focus on its strategic direction, as well as DPC to focus on the markets we serve.”
In addition, The Carlyle Group has committed to help DPC grow. Greg Ledford, managing director of The Carlyle Group and head of its Industrial and Transportation team, says the company will make “targeted investments” to support DPC’s product development and growth objectives as it transitions into a stand-alone company.
“After closing, with a renewed focus on our market space, I see DPC really exploding and growing the way we know we can,” Bennett says.
Aside from a possible change of the company’s name and logo, which is not yet known, global operations will remain intact as they are today. DPC will retain its 11,000 employees, six manufacturing sites and 4,000 independent distributors. In addition, DPC will offer the same products, services and training opportunities.
Bennett says DPC’s shop customers’ access to products, cost structures and distribution chains will not be affected by the transaction.
“There will be absolutely no change to how we serve this market,” Bennett says. “We’re committed to ensuring that our customers are not disturbed with this transition. We anticipate no change to our service level, products, technology and training. All of the things we currently do, we’re going to continue to do.”
