Activist investor Nelson Peltz's Trian Fund Management L.P. has bought a stake in chemicals giant E.I. DuPont De Nemours & Co. (DD: Quote). The move comes even as DuPont has said it is exploring strategic alternatives for its performance chemicals segment.
In a filing with the Securities and Exchange Commission on Thursday, Trian Fund said that as of June 30, 2013, it held 5.78 million shares in DuPont. The stake is worth $343.06 million, based on Thursday's closing stock price of DuPont shares.
Meanwhile, the Wall Street Journal said that Trian Fund has met in recent weeks with DuPont Chief Executive Officer Ellen Kullman to discuss the hedge fund's ideas, as it has taken a stake in the company.
According to the WSJ report, Trian often publishes "white papers" on companies that it holds stakes. In the white papers, Peltz outlines his ideas for how to run these companies more efficiently.
Trian reportedly discussed its white paper on DuPont in recent meetings with senior management. DuPont reportedly said that it will evaluate any ideas Trian may have in the context of the company's ongoing initiatives to build a higher value, higher growth company for its shareholders.
In a regulatory filing Thursday, DuPont also said it has adopted a severance plan for senior executives in the event of a change in control, either by the company "without cause", or the participant for "good reason".
The participant will be entitled to receive, among other things, a lump sum cash payment equal to two times the sum of the participant's base salary and target annual bonus. For the company's CEO, the lump sum cash payment will be equal to three times the sum of the base salary and target annual bonus.
In late July, DuPont reported a lower second-quarter profit that reflected a sharp decline in earnings at its performance chemicals segment. The company also said at that time that it is exploring strategic alternatives for the segment.
The company said its consideration of strategic alternatives for the segment may include a full or partial separation of each of these businesses from the company through a spin-off, sale or other transaction. The segment includes Titanium Technologies and Chemicals & Fluoroproducts businesses. DuPont added it might pursue a different strategic alternative for each business.
Peltz is known to push for changes at companies in which he buys stakes. Trian Fund, which recently ramped up its stake in snack food maker Mondelez International Inc.(MDLZ), has suggested combining the snack business of PepsiCo Inc. (PEP) with Mondelez. Known for its Cadbury brand chocolates and Oreo biscuits, Mondelez last year split from its parent Kraft Foods Global Inc. to focus on the international snacks business.
Ingersoll-Rand plc (IR) said in December 2012 that its board of directors approved a plan to spin off its combined commercial and residential security businesses to shareholders.
Trian Fund, which bought a 7.3 percent stake in Ingersoll-Rand in May 2012, was seeking a breakup of the company and had reportedly threatened a proxy battle. Ingersoll-Rand's board is then said to have held a meeting and decided to offload some assets.
DD closed Thursday's regular trading session at $59.37, down $0.34 or 0.57 percent on a volume of 3.70 million shares. In after-hours, the stock further declined $0.26 or 0.44 percent to $59.11.
by RTT Staff Writer
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