DuPont sale of Aramids furthers mix shift strategy, says BofA

After DuPont (DD) announced it has reached an agreement to sell its Aramids business to Arclin for a total value of $1.8B, BofA said the deal price is not far off the prior Bloomberg reported “potentially $2B,” though adds the $1.2B to be paid in cash at close is “clearly a bit softer” than expected. The stated plan to use proceeds for acquisitions at the pro forma DuPont Co, likely targeting higher-value water and healthcare markets, is in line with DuPont’s strategy to upgrade its business mix over time, but also “implicitly highlights the difficulty of the strategy” as DuPont monetizes legacy assets at mid-high single digit multiples on pre-tax values and deploys that to acquisitions at multiples closer to the mid-teens, adds the analyst, who maintains a Neutral rating on shares.