Finance 561 Keller Paper on Dupont

Week 5 - You Decide - Case Study - Dupont's Divestiture of Conoco

Tab Manning

Keller Graduate School of Management

Mergers and Acquisitions

562

Professor Gene Smith

April 05, 2014

Table of Contents

Executive Summary 1

Pre-merger of Du Pont and Conoco 1

Financials during the merger 5

Financials after the divestiture of Conoco 9

Crude oil and Chemical Historical Analysis 11

Recommendation/Conclusion 13

References 15

Week 5 - You Decide - Case Study - Dupont's Divestiture of Conoco

Executive Summary:

Our goal is to determine the value of Du Pont and Conoco to the extent that by divesting Conoco from Du Pont it makes smart business sense. The companies have a high degree of synergies and economies of scale. Both are market leaders in their respective market segments. Furthermore, many of Du Pont’s products utilize petroleum based derivatives in the process and manufacturing of Du Pont’s chemicals. The goal is to analyze the financial data of Du Pont and Conoco prior to the merger, during the merger, and after the merger. After we have analyzed the data we can then make a more educated evaluation of the divestiture activities that took place in 1998 between the two organizations. We will take a closer look at the two-stage divestiture technique utilized by Du Pont in the divestiture of Conoco. This two stage transaction involved an equity carve-out of 30% of Conoco’s shares and then 70% of Conoco’s...