Activist investor Nelson Peltz secretly met with board members of DuPont Co. to once again push his plans for major structural reforms at the chemical giant, the FOX Business Network has learned.
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The meeting was not held at DuPont’s Wilmington Del., headquarters, but at an area hotel to maintain a level of confidentiality as Peltz made a presentation to the company’s directors as well as interim chief executive Edward Breen, according to people with direct knowledge of the matter.
Peltz’s hedge fund Trian Partners, which owns a 2.7% stake in DuPont, has been waging nearly a year-long battle to improve what he considers a lackluster performance and a bloated infrastructure. As part of Peltz’ move, he has demanded a breakup of the $56 billion chemical conglomerate -- moves that current management has so far resisted.
In May, Peltz lost a proxy battle, where he was seeking board seats to expedite his plans. But in early October, his chief nemesis CEO Ellen Kullman was forced by the company’s board to step down as the company’s profits continued to sag.
With her departure, many analysts believed Peltz would launch another proxy battle or appeal directly to the company’s board to initiate his breakup plans and shares of DuPont have soared more than 21%.
Some analysts speculate that Peltz may have an easier time convincing Breen, the interim CEO and board chairman to embark on his changes, since he has a background in corporate restructurings while CEO of Tyco (NYSE:TYC). The meeting last week is said to be a first between two sides since Kullman’s resignation.
During the company’s third-quarter earnings call on Tuesday, when asked by an analyst if he would consider a break-up of the company, Breen responded: I've had two very distinct paths where we created significant value at both. One happened to be a split up that obviously worked very well. The other was not a split up at all. It was a growth strategy with assets that we had that also worked extremely well. So I come in with a very open mind.
But the response by a board member to Peltz’s presentation was described as “tense,” an indication that Peltz has yet to convince the majority of directors to embark on a major redesign of the 212 year old company, according to people with direct knowledge of them matter.
A spokeswoman for Trian declined to comment; a spokeswoman for DuPont didn’t return emails and telephone calls for comment.
Earlier in the week, DuPont announced third quarter earnings of $235 million, or 26 cents a share. That’s below the $434 million, or 47 cents, from a year earlier, but shares rose as Breen announced plans to reduce costs and sell its agricultural business.
Peltz has indicated publicly that he will keep the pressure on DuPont management to improve earnings, and possibly mount another proxy fight to gain board seats and eventually break up the company. After losing the proxy battle in May, he said if given the opportunity, he would mount another proxy battle.
Despite his earlier loss, Peltz’s plans won support from many mutual funds and various proxy advisory firms—something that might sway Peltz to launch another proxy fight if the board of DuPont continues to rebuff his demands, people with knowledge of the matter say.
He’s also been heartened by the market reaction to his proposals. Just after Peltz announced his proxy fight with DuPont, shares spiked to $80 only to fall to below $50 a share as Kullman convinced enough investors – mainly index funds —to maintain DuPont’s current corporate structure.
“One thing is certain,” said a person with knowledge of the matter. “Nelson’s fight is far from over.”