The Zhitong Finance App learned that multinational chemical giant DuPont (DD.US) announced plans to split into three independent listed companies on Wednesday to further streamline its organizational structure. Boosted by this news, as of press release, DuPont's US stocks rose nearly 5% after the market on Wednesday.

According to DuPont's plan, the company will split the electronics and water business division through duty-free transactions to form two unnamed subsidiaries. Among them, the newly established electronics company will focus on “semiconductor solutions and advanced electronic products,” while the new water company will become “a comprehensive water treatment solution provider.” The remaining divisions will remain within the DuPont system, and the business will focus on industries such as biopharmaceuticals and medical devices. DuPont expects the split to be completed within the next 18 to 24 months, pending final approval from the board of directors and regulators.

In addition to the restructuring, DuPont also announced senior personnel changes. DuPont appointed current CFO Lori Koch as the new CEO, effective June 1, to replace current CEO Ed Breen. Ed Breen will remain executive chairman. Once the split is complete, Lori Koch will continue as CEO of the newly formed “Lite” DuPont.

According to the data, DuPont's business had net sales of approximately US$6.6 billion in 2023, with an operating profit margin of about 24%. The electronics business, which is planned to be split, had net sales of about US$4 billion in 2023, with an operating margin of about 29%; the water business had net sales of about US$1.5 billion in 2023, with an operating margin of about 24%.

The division of business is viewed by many large multinational groups as a key strategy to enhance shareholder value. Earlier, traditional blue-chip stocks such as Johnson & Johnson and General Electric announced splits. Many company CEOs and boards of directors have emphasized that smaller companies are more agile.

Ed Breen said in a statement that each will have greater development flexibility after the spin-off into three companies. He said, “The spin-off of the three companies will unlock more value for shareholders and customers, while also creating new opportunities for employees. The key is that each company will have greater flexibility to pursue its own key development strategies, including mergers and acquisitions, and other actions to optimize the business portfolio.”

It is worth mentioning that this split is DuPont's second large-scale restructuring in five years. In 2019, Dow DuPont, a merger between DuPont and Dow Chemical, split into three separate companies: DuPont, Dow Chemical, and agricultural company Corteva.