The success of the Intended Electronics Separation ultimately depends on, among other things, DuPont's ability to internally separate the Electronics business in a manner that facilitates the Intended Electronics Separation on a U.S. federal income tax-free basis and enables the future Electronics company as well as “new” DuPont, as a diversified industrials-focused company, (the “FutureCos” and each, a “FutureCo”), to benefit from increased focus and agility in their respective industries.
DuPont, and each of its businesses, has and continues to benefit from efficiencies through the optimization of its global footprint, leveraging of corporate, procurement and functional services and costs across all of its businesses. While the Intended Electronics Separation is expected to create dis-synergies, the intent is to stand the FutureCos in a way that is favorably competitive for each FutureCo’s respective industry.
The separation and distribution transactions necessary to effectuate the Intended Electronics Separation will be complex, costly and time-consuming, and are subject to difficulties, uncertainties and unanticipated risks, each of which may diminish the benefits the Company expects to realize from the Intended Electronics Separation. These include, but are not limited to:
- delays, both generally and as a result of failure to satisfy all of the required conditions to the Intended Electronics Separation;
- unanticipated developments or changes, including changes in law, macroeconomic environment, market conditions or political or regulatory conditions, including as a result of executive orders;
- difficulties in standing the FutureCos and completing the Intended Electronics Separation in an efficient and effective manner to achieve business opportunities and growth prospects;
- costs or inefficiencies associated with dis-synergies, including due to increased borrowing costs;
- the diversion of management’s attention from ongoing business concerns and performance shortfalls at the Company as a result of the devotion of management’s attention to the Intended Electronics Separation;
- the possibility of faulty assumptions underlying expectations regarding the integration process, including with respect to the Intended Electronics Separation;
- unanticipated issues in creating information technology, communications programs, financial procedures and operations, and other systems, procedures and policies;
- impact on relationships with employees, suppliers, customers, distributors, licensors and other stakeholders;
- tax costs or inefficiencies associated with the Intended Electronics Separation; and
- potential negative reactions from the financial markets if the Company fails to complete the Intended Electronics Separation, as currently expected, within the anticipated time frame or at all.
If the Intended Electronics Separation is completed, each of the FutureCos will incur ongoing costs of operating as independent companies that will no longer be shared, and each of the FutureCos will be smaller, less diversified companies with more limited businesses concentrated in their respective industries than DuPont is today. As a result, the FutureCos may be more vulnerable to changing market conditions, be subject to costs that exceed the Company’s estimates and the Intended Electronics Separation may result in existing shareholders divesting the stock of the FutureCos where investment strategies no longer align, which may affect the market price of the respective FutureCos’ common stock following the consummation of the Intended Electronics Separation. Each of these risks may diminish the benefits the Company expects to realize from the Intended Electronics Separation. Further, if the Intended Electronics Separation is ultimately not consummated, the anticipated benefits, operational efficiencies, business opportunities and growth prospects may not be realized fully or at all, or may take longer to realize than expected, and the value of common stock, the revenues, levels of expenses and results of operations of each of the FutureCos may be adversely affected. In addition, the Company will have incurred costs (which may be significant) without realizing the benefits of such transaction.