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DowDuPont Board Approves Materials Science Division Separation

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DowDuPont approves Materials Science Division separation

In a press release on March 8, DowDuPont (DWDP) made an announcement that its board of directors has approved the separation of DowDuPont’s Materials Science division, which will become the new DOW on April 1. DWDP announced the key dates for the pro-rata dividend distribution. To be eligible for this distribution, investors must hold DWDP stock as of the close of business on March 21, 2019. The dividend is expected to be payable on April 1, 2019.

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The board declared that DowDuPont shareholders would receive one share of Dow common stock for every three shares of DWDP common stock. If there are any fractional shares, DWDP stockholders will receive cash in lieu. Ed Breen, CEO of DowDuPont, said, “Today’s announcement marks a major milestone toward successfully separating Dow on April 1, to be followed by the expected separation of Corteva Agriscience from the new DuPont on June 1. We believe that each of the intended three independent companies is set to be an industry leader with the right management and capital structure to better serve customers, compete in their end markets and focus on their innovation priorities.”

DowDuPont’s stock price

DowDuPont’s stock rose 2.5% and closed at $54.68 for the week ending March 8. Despite the gain in the stock price, DowDuPont traded 1.2% below the 100-day moving average price of $55.34. DowDuPont’s 100-day moving average has fallen from a high of $67.6 to the current level in the past six months, which indicates weakness in the stock. However, DowDuPont has risen by 3.1% in 2019. DowDuPont’s 14-day relative strength index of 51 indicates that the stock isn’t overbought or oversold.

Investors could hold DowDuPont indirectly by investing in the Materials Select Sector SPDR Fund (XLB). XLB has invested 19.8% of its portfolio in DowDuPont. XLB also provides exposure to Linde (LIN), Air Products and Chemicals (APD), and LyondellBasell (LYB) with weights of 14.9%, 6.3%, and 4.3%, respectively, as of March 8, 2019.

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