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DuPont to buy Rogers Corp. for $5B as it realigns

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DuPont announced Tuesday that it is realigning the company toward greener growth industries, beginning by acquiring Arizona-based Rogers Corp. for $5.2 billion. DBT PHOTO BY JACOB OWENS

WILMINGTON – DuPont announced Tuesday morning that it has reached an agreement to acquire Rogers Corp., an engineered materials and components company, for $5.2 billion as part of a larger strategy to realign the advanced materials company toward growth industries.

It may mean that the company once best known for gunpowder, nylon, Teflon and Lycra over differing generations may one day be known for electric vehicles, 5G telecommunications and clean energy.

A publicly traded company based in Arizona, Rogers has a global workforce of more than 3,500 employees at 14 manufacturing sites in North America, Europe, and Asia. It has expected revenues of approximately $950 million this year, officials reported.

The deal would appreciate Rogers by about 33% on its market cap from its market close position Monday, offering $277 a share. The transaction is expected to close in the second quarter of 2022, subject to customary closing conditions, including approval by Rogers’ shareholders and receipt of applicable regulatory approvals.

Rogers designs, develops, manufactures and sells high-performance engineered materials and components through its Advanced Electronics Solutions (AES) and Elastomeric Material Solutions (EMS) segments. It makes “high-frequency circuit materials, ceramic substrates for power semiconductor devices, and high-performance foams which go into a variety of highly specialized end-markets where the company has strong, enduring customer relationships,” according to DuPont’s announcement.

“With industry-leading positions in each of its product categories, a proven history of application engineering excellence and deep customer relationships, Rogers is highly complementary to and aligned strategically with our existing Electronics & Industrial business and is expected to deliver compelling returns over the near and long-term,” DuPont CEO Ed Breen said in a statement announcing the sale.

DuPont expects to realize approximately $115 million in pre-tax run-rate cost synergies by the end of 2023.  The cost synergies associated with both the recent $2.3 billion acquisition of Chinese performance materials company Laird Performance Materials and the intended Rogers acquisition represent approximately 6% of the combined revenue, including DuPont Interconnect Solutions.

The deal comes as DuPont continues to shed its own divisions, however, announcing Tuesday that it also seeks to sell a substantial portion of its Mobility & Materials segment. Proceeds of that sale will repay financing lined up for the Rogers’ acquisition and potentially help pay for additional future acquisitions, the company reported.

That Mobility & Materials divestiture would primarily include products in the engineering polymers and performance resins lines of business – including brand names like Zytel, Delrin, Hytrel, Crastin, Vamac and TEDLAR – as well as DuPont’s stake in the DuPont Teijin Films joint venture. Combined, segment sees about $4.2 billion in revenue and about $1 billion of operating EBITDA based on full year 2021 estimates.

“Through unprecedented challenges in the past 18 months, these teams have proven that their unwavering commitment to deliver for their customers, employees and partners has generated solid results and I am confident they are well equipped to expand their leadership positions under new ownership,” Breen added.

The chief executive best known for overseeing DuPont’s brief merger with Dow and its subsequent split of its divisions oversaw the divestment of the company’s Nutrition & Biosciences segment and its clean technology business in the past two years. He also engineered the acquisition of Laird in March.

  He said DuPont sought to focus on “high-growth, high-value opportunities in sectors with steady long-term secular growth trends where our global innovation leadership enables a competitive advantage,” with a portfolio centered on electronics, water, protection, industrial technologies and next generation automotive.

“We are committed to investing in each of these pillars organically and through strategic acquisitions to maximize our capabilities in areas that enable our customers to grow by delivering next generation technologies and sustainable high value-added solutions,” he added.

The strategy shakeup comes as DuPont’s share value continues to underperform since its split from Dow, Corteva and Chemours, trading even about 10% off its 52-week high following a roughly 4% bump off the Rogers’ news Tuesday. Its third-quarter earnings report released Tuesday showed a profit of more than $400 million, a year after it reported a $72 million loss in the third quarter of 2020. Net sales increased by 18% year over year.

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