Wilmington, DL, Nov. 13--The DuPont Co. on Wednesday told regulators it expects to close a sale of Invista for about $4 billion during the first half of next year, one-third less than some analysts originally had predicted.
DuPont in August said it had entered exclusive negotiations with a unit of Koch Industries Inc., a Wichita, Kan.-based commodities trader, to sell Invista. Until now, DuPont also had said it hoped to divest the division by year's end, either by selling it or spinning it off as a separate, publicly traded company.
Analysts said Wednesday that the language of DuPont's filing with the Securities and Exchange Commission seemed finally to rule out a public offering, which the company had held out as a possibility as recently as its third-quarter earnings report on Oct. 22.
DuPont spokesman R. Clifton Webb said the company is keeping its options open, "but we're in exclusive and concentrated negotiations with Koch."
In the filing, DuPont disclosed "assets held for sale" totaling $5.65 billion and "liabilities held for sale" of $1.599 billion. The difference, $4.051 billion, represents "our best estimate of the fair market value of assets held for sale at the end of the third quarter," Webb said. Those assets consist entirely of Invista, he said.
Asked whether DuPont's estimate amounted to a price tag for Invista, Webb said, "Any estimate, such as the fair market value, has certain ranges of uncertainty associated with it."
The estimate is less than the $5 billion to $6 billion Wall Street expected when it began to speculate on Koch as an Invista buyer in the spring, but it is nevertheless within current expectations, some analysts said.
"We believe this is positive news, since we would view the alternative of a spin-off as negative," Buckingham Research Inc. analyst John Roberts wrote in a note to clients Wednesday morning.
DuPont shares closed up 18 cents at $40.68.
The weak industrial economy has led most analysts to dismiss the viability of a public offering of what would be the world's largest integrated fibers company, which was named Invista in September.
In February 2002, DuPont segregated what was then called DuPont Textiles & Interiors from its other businesses, and announced plans to shed it. The goal is to make the overall company less prone to both economic swings that control demand for commodity products like fibers, and fluctuating prices of oil and natural gas that are their basis.
Invista accounted for 26 percent of DuPont's net sales of $20.5 billion in the nine months ended Sept. 30, and is said by some analysts to account for half the company's exposure to oil and natural gas costs.
Asian imports, based on cheaper labor, also have hobbled Invista's ability to compete.
DuPont last month posted $1.04 billion in charges against third-quarter earnings related to Invista, including a $987 million write-down of its value. As a result, DuPont lost $873 million for the quarter.
Invista's vulnerabilities may be hurting DuPont at the negotiating table. "Given the high oil price, which has reduced the profitability of the fibers business, Koch Industries (the buyer) probably had the leverage to negotiate a lower price," Smith Barney analyst P.J. Juvekar wrote in a note to clients last week, while predicting sale proceeds of $4.2 billion to $5 billion.
Koch spokeswoman Mary Beth Jarvis would not comment Wednesday.
