DuPont to Acquire Laird Performance for $2.3 Billion, Shares Gain

DuPont announced that it will acquire Laird Performance Materials from one of the world’s largest private equity firms Advent International for $2.3 billion that will strengthen the company’s leadership position in advanced electronic materials, sending its shares up about 3% on Monday.

The deal is expected to close in the third quarter of 2021. DuPont expects to realize nearly $60 million in pre-tax run-rate cost synergies by the end of 2024 with the majority realized in the first 18 months post-closing. The estimated one-time cost to achieve these synergies is about $40 million.

After adjusting for one-time costs and deal-related amortization, DuPont expects the deal to be accretive to its operating EBITDA margins, free cash flow, and adjusted EPS within the first 12 months and to achieve high single-digit ROIC by year five.

The industrial materials maker also said that its Board of Directors approved a new $1.5 billion share buyback program which expires on June 30, 2022.

At the time of writing, DuPont shares, which rose about 11% in 2020 and added another 6% so far this year, traded about 3% higher at $76.19 on Monday.

DuPont Stock Price Forecast

Eleven analysts who offered stock ratings for DuPont in the last three months forecast the average price in 12 months of $83.00 with a high forecast of $90.00 and a low forecast of $70.00.

The average price target represents a 9.99% increase from the last price of $75.46. Of those 11 analysts, five rated “Buy”, six rated “Hold” while none rated “Sell”, according to Tipranks.

DuPont had its price objective hoisted by BMO to $85 from $83. JPMorgan raised the price target to $80 from $70. BofA Global Research upped the price objective to $89 from $87. Stephens increased the target price to $76 from $55.

Several other analysts have also updated their stock outlook. Citigroup lowered the price target to $84 from $85. RBC cut the target price to $87 from $89. Deutsche Bank slashed the price target to $85 from $95. Jefferies raised the target price to $92 from $84. UBS increased the price objective to $93 from $80.

Analyst Comments

“We continue to view DuPont’s stock as undervalued. With shares trading in the 4-star territory, we think the market is undervaluing DuPont’s long-term growth prospects following the COVID-19-related economic slowdown,” said Seth Goldstein, senior equity analyst at Morningstar.

“We see rebounding sales and profits in the near-term as sales of autos and other vehicles recover. Longer-term, DuPont is well-positioned to benefit from growing electric vehicle and hybrid adoption as the company generates around 50% more revenue per vehicle for an EV or hybrids, relative to an internal combustion engine.”