Dupont Selling Their Auto Paint Unit

[David Fermani]

DuPont Said to Weigh Sale of Auto-Paint Unit





By Zachary R. Mider and Jeffrey McCracken - Oct 28, 2011 4:20 PM ET



DuPont Co. is exploring a sale of its auto-paint division that may fetch as much as $4 billion, said people with knowledge of the matter, as the company focuses on faster-growing products such as food additives.



DuPont hired Credit Suisse Group AG to seek buyers for the so-called Performance Coatings division, said the people, who spoke on the condition of anonymity because the talks are private. Credit Suisse has yet to begin an auction process, the people said.



The estimated $3 billion to $4 billion value of the division includes a smaller powder-coatings unit that Wilmington, Delaware-based DuPont is selling separately, the people said. Greenhill & Co. is handling the sale of that piece of the business, which makes coatings for tractors and playground equipment, people with knowledge of that effort said earlier this month.



The performance-coatings operations accounted for about 12 percent of DuPont’s $31.5 billion in revenue last year and 5.1 percent of operating income. Coatings for refinishing vehicles accounted for almost $1.7 billion of sales last year, new-car coatings totaled $1.2 billion, and sales of powder and liquid coatings were about $950 million, according to DuPont.



‘Turnaround Story’



The pretax operating-profit margin was about 7 percent last year, the worst of DuPont’s six divisions and half the margin of the safety-and-protection division, which was the second-worst performing unit. DuPont executives said in December that they planned to boost operating profit in performance coatings to at least 10 percent of sales by 2012.



“Performance coatings is a turnaround story, with less emphasis on revenue growth and more on productivity and cash generation,� Chief Financial Officer Nicholas Fanandakis told investors at the Dec. 9 meeting.



Performance coatings will account for 10 percent of sales and 5 percent of earnings next year as the weak automotive sector continues to pressure margins, Mark Gulley, a New York- based analyst at Ticonderoga Securities, said by telephone today.



“The margins are half the corporate average, so selling it would improve the portfolio,� Gulley said.



Gregg Schmidt, a DuPont spokesman, declined to comment. A Credit Suisse spokesman also declined to comment.



Acquisition in 1999



DuPont nearly doubled its auto-paint business to become the industry leader in 1999 with the $1.9 billion acquisition of Herberts from Germany’s Hoechst AG. Other top producers of transportation coatings include Pittsburgh-based PPG Industries Inc. (PPG), Ludwigshafen, Germany-based BASF SE (BAS), and Akzo Nobel NV (AKZA), based in Amsterdam.



Ellen Kullman, who became DuPont’s chief executive officer in January 2009, is focusing DuPont’s growth on “megatrends� stemming from the growing global population: Improving food quality and agricultural productivity, cutting reliance on fossil fuels, and protecting the environment and people. She expanded this year in food ingredients and biofuel enzymes with the purchase of Danisco A/S for $7.1 billion including the assumption of debt.



DuPont rose 1.3 percent to $49.36 at the close in New York. The shares have declined 1 percent this year.



The U.S. auto industry has been a customer of DuPont since its inception, the company said on its website. DuPont, which also makes plastics for auto parts, supplied General Motors Co. in the 1920s with a spray-on coating that cut the weeks-long process of painting a car to six hours.



To contact the reporters on this story: Zachary R. Mider in New York at zmider1@bloomberg.net; Jeffrey McCracken in New York at jmccracken3@bloomberg.net.



To contact the editors responsible for this story: Jennifer Sondag at jsondag@bloomberg.net; Simon Casey at scasey4@bloomberg.net.

[C. Charles Hahn]

Wow.... certainly didn`t see that coming! That is huge; I wonder who will pick them up?

[imported_Erik Mejia]

Crazy! That is a huge change for the Dupont Company. I wonder who will purchase their paint division.

[Ron Ketcham]

I had a hint of this back in the summer of 2009.

Got asked to a retirement party for a fellow from DuPont in Detroit the summer of 2009.

Good guy, had worked with him on several concerns over 15 or so years.

I drove up, they had a golf outing, and while sharing a cocktail or two, asked him "why now, you just turned 60, got 20 years in?".

His reply was basically, "New queen on the throne, no place to go for such as you and me.".

When I chose to retire, he was one who I had called and told why I was doing so.

Uncomfortable changes in my company made realize that things were going to not be comfortable for me.

While driving home, it hit me, DuPont is going to get out of the automotive finishes and go a different direction.

Surprised it took her this long.

Grumpy

[C. Charles Hahn]

Update from today:







DuPont launches sale of car paint unit, sources say



Read more: http://www.autonews.com/article/2012...#ixzz1mKNpJiKK





NEW YORK (Reuters) -- Chemical maker DuPont has launched the sale process of its lucrative car paint business, which could bring in more than $4 billion and should attract robust private equity interest, according to sources familiar with the matter.



The company`s adviser, Credit Suisse Group, has sent out financial materials related to the unit to potentially interested parties, the sources said.



Reuters and other news organizations originally reported in October that DuPont was considering the sale of the unit.



Several buyout firms have been preparing for the auction since late last year. Reuters reported in December that KKR & Co., Bain Capital, TPG Capital and Onex Corp. had already made inquiries about the sale.



The unit could also attract interest from other chemical companies.



The performance coatings business primarily sells to Maaco and other auto paint refinishers. Ford Motor Co. and General Motors are also key customers, though selling to so-called original equipment manufacturers is not as lucrative.



DuPont and Credit Suisse declined to comment on the matter.



Read more: http://www.autonews.com/article/2012...#ixzz1mKNfvkcc

[jfelbab]

Wondering what impact that may have on the NASCAR Sprint Cup sponsorship of Jeff Gordon`s Dupont Chevrolet???