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Chemical Companies Last Week: 'Tis the Season for Selling

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Part 3
Chemical Companies Last Week: 'Tis the Season for Selling PART 3 OF 4

DuPont Sells Its Food Safety Diagnostics Business to Hygiena

DuPont to dispose of food safety diagnostic business

In a strategic move on December 14, DuPont (DD) announced that Hygenia will acquire its global food safety diagnostics business. The deal includes all of DuPont’s diagnostics business assets including the BAX and RiboPrinter systems and associated test kits, a global and technically trained sales, R&D and manufacturing organization, and in-house production capacity.

DuPont Sells Its Food Safety Diagnostics Business to Hygiena

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The company didn’t disclose the financial terms of the agreement. However, DuPont expects the transaction to be completed by 1Q17.

Impact on DuPont

The company’s Nutrition & Health segment might be impacted as a result of this sell-out. However, it’s difficult to assess the impact on the Nutrition & Heath segment’s revenue and income. In the first nine months of 2016, the segment generated sales of ~$2.5 billion—approximately 13% of DuPont’s total revenue until the end of 3Q16.

DuPont’s stock price

On December 16, 2016, DuPont closed at $74.86 and remained flat for the week. The Materials Select Sector SPDR ETF (XLB), which holds 11.70% in DuPont as of December 16, lost 2.1% for the week and closed at $50.42. DuPonts’s stock price closed 7.4% higher than the 100-day moving average price of $69.67. It indicates an upward trend in the stock. Analysts expect DuPont’s 12-month target price to be $77.14. It implies a potential return of 3.0% from the closing price as of December 16, 2016. On a year-to-date basis, DuPont has gained 12.40%.

Notably, investors can indirectly hold the company’s stock by investing in the Materials Select Sector SPDR ETF. The fund’s top holdings include Dow Chemical (DOW), Monsanto (MON), and Praxair (PX). They have weights of 11.80%, 8.3%, and 6.3%, respectively, as of December 16, 2016.

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