You Decide Week 5

Case Study of DuPont Divestiture of Conoco

DuPont Divestiture of Conoco

By

Rotimi Ajibade

Masters of Business Administration

Keller Graduate School of Management, 2013

Professor: Robert Popovitch

FIN 561- Mergers and Acquisition

Spring Semester

Keller Graduate School of Management

Online

Table of Contents

1.0 Face Page……………………………………………………………………...1

2.0 Table Contents………………………………………………………………...2

3.0 Abstract…………...…………………………………………………………...3

4.0 Introduction…………………………………………………………................4

5.0 Movements of DuPont ......................................................................................5

6.0 Possible Alternatives…………..………………………………………………8

7.0 Recommendations…………………………………………………………….10

8.0 References…………………………………………………………………….11

3.0 Abstract

In this paper, we are examining the 1998 DuPont spin off of Conoco by analyzing the transaction itself. Then, I look at one of the possible alternatives to the chosen transaction and compare that alternative with the actual long-term impacts of the sale. I will then decide and recommend which option would have been the best utilized by DuPont over the long-term in order to generate the most revenue from its ownership of Conoco.

DuPont purchased Conoco in 1981 and it was the largest merger in corporate history at that time. The purchase gave DuPont a secure source of petroleum feed stocks needed for many of its fiber and plastics operations. Conoco also manufactured profitable commercial petroleum products and coal, produced by the wholly owned subsidiary Consolidated Coal Company. (“DuPont” 2011)

4.0 Introduction

Over the last several years, corporate America has often turned to spin offs as a way to increase their bottom line numbers. This has proven to be an effective tool in helping a firm to both divests itself of an unprofitable division and to raise...