NEW YORK — Addressing weeks of industry speculation, DuPont officials on Monday acknowledged that the Wilmington, Del.-based chemicals giant is in talks to sell its $6.3 billion textiles business to a third party.
This story first appeared in the April 15, 2003 issue of WWD. Subscribe Today.
Calling the talks “preliminary,” they declined to identify that party. But, as reported, DuPont is said to be in talks with privately held Koch Industries, according to industry sources.
“We are in the early stages of negotiations with a third party,” said Bill Ghitis, president of Global Apparel for the DuPont Textiles & Interiors unit. “We are continuing to consider a variety of options, as we always have said, including an initial public offering for late 2003.”
A spokeswoman with Wichita, Kan.-based Koch declined to comment on whether the company was interested in buying DTI. Ghitis declined to comment on the potential value of the deal, but he said DuPont would continue to entertain other offers.
“I really don’t know where this negotiation will go,” he said.
Sources have said Koch has offered more than $4.5 billion for DTI.
“We have to look at third-party interests in DTI because it is our responsibility toward our shareholders to evaluate all options,” he said.
Ghitis added that DuPont disclosed the negotiations because it will be legally required to do so in paperwork to be issued Thursday in connection with its effort to buy the 24 percent of DuPont Canada it does not already own.
That acquisition is one of the final steps DuPont must complete to sell or spin off DTI. The firm said last year that it intended to break DTI off into an independent company by the end of this year, and by Feb. 1 DTI was operating as a wholly owned subsidiary.
Ghitis said he was not personally involved in the negotiations. He said DuPont corporate management was handling the sale, leaving DTI officials to focus on running their business.
He said the potential sale “changes nothing to our strategy,” which, he said, is to “bring to our customers consumer-driven innovations, products and services that our research and market insight tells us consumers will appreciate.”
As evidence of DTI’s management focus on operations, he said, despite “really tough” market conditions in the first quarter, the unit’s revenues were up more than 10 percent compared with a year ago. DuPont plans to release full financial results for the quarter ended March 31 later this month.
Koch already has a presence in the fiber business. It owns KoSa, the polyester manufacturer. Koch is primarily a petroleum company and sources said it appears to be interested in DTI because that business could be a new outlet for its products. Petroleum derivatives are the primary raw materials of polyester and nylon.
Some industry sources have suggested that Koch might seek to resell DuPont’s Lycra spandex unit, since spandex is not a petroleum-dependent fiber. Some speculated that Steve McCracken, a DuPont group vice president over DTI, might seek to assemble an investor group to buy the Lycra business.
Ghitis declined to comment on that scenario. He said if a third party buys DTI, “I think they will make their own decisions. I don’t know what they would do.”
DuPont shares rose 82 cents, to close at $40.30 on the New York Stock Exchange Monday on the news.