- Corteva shares drop 7% after split announcement
- Crop-protection unit to handle PFAS environmental claims
Oct 1 (Reuters) - Corteva said on Wednesday it would separate its seed and pesticide businesses into separate listed companies, as the agrichemicals firm seeks to sharpen its strategic focus.
The separation will allow each company to set specific capital allocation strategies, respond faster to market shifts and pursue growth opportunities independently, Corteva said.
Its shares fell about 7% to their lowest in nearly five months. The stock has fallen more than 14% since the Wall Street Journal reported the company's spin-off plans last month, as analysts raised concerns about disruption and dilution.
The company has estimated dis-synergies, or added costs from splitting the company, of $80 million-$100 million.
"We don't believe Corteva's valuation multiple has been hurt or constrained by having the pesticide business in the portfolio... pesticide business has benefited from the halo effect of the higher-value seed business," Mizuho analyst Edlain Rodriguez said.
Corteva added its crop protection unit would be responsible to settle the environmental claims, including pollution linked to PFAS, or "forever chemicals".
The company, along with DuPont and Chemours, are obligated to pay $875 million over 25 years to the State of New Jersey.
Corteva's seed business accounted for 57% of its total sales in 2024, with remaining coming from its other segment, which produces herbicides, fungicides, insecticides and seed treatments.
The company itself was formed from chemical conglomerate DowDuPont's three-way split in 2019. Corteva's split follows six years of cost cuts, portfolio simplification and investment in new technologies.
Since the separation, Corteva's shares have risen over 133%, and its market value now stands at $45.93 billion.
Corteva joins several giants such as Kraft Heinz, Warner Bros Discovery and DuPont, which have announced big-ticket spin-offs over the last year.
The spin off is expected to complete in the second half of 2026.
CEO Chuck Magro will lead the seed spin-off, while Chairman Greg Page will stay on at Corteva, which will focus on crop protection.
Reporting by Vallari Srivastava in Bengaluru; Editing by Shailesh Kuber and Leroy Leo
Source: Reuters