DuPont considers spin-off alternatives

USA: There is speculation amongst US financial media that DuPont might be considering alternatives to its planned spin-off of its refrigerants business.

Last October DuPont announced that it would spin-off its performance chemicals unit, of which its refrigerants business is a part, within 18 months.

Speaking in New York this week, DuPont’s chief financial officer Nicholas Fanandakis didn’t rule out a spin-off, or even a direct sale, but also mentioned the possibility of a so-called Reverse Morris Trust. This has led to speculation of a deal with Tronox Ltd, a US-based titanium-dioxide manufacturer.

Such a deal would have significant tax benefits. A Reverse Morris Trust enables a parent company to spin-off a subsidiary to the parent company’s shareholders – a potential tax-free procedure under US tax law. The former subsidiary can then merge with a target company to create a merged company. Again, this could be largely tax-free if the former subsidiary’s shareholders own more than 50% of the merged company.

DuPont to spin-off refrigerants business (25th October 2013)

DuPont considers selling its refrigerants business (24th July 2013)