E.I. du Pont de Nemours and Company: The Conoco Split-off (A)
1. Do you believe DuPont management’s claim in early-to-mid 1998 that Conoco was dragging down DuPont’s value?
2. Assuming DuPont’s stock price was in fact undervalued, was the October 1998 IPO of Conoco the best way to address this problem? Would any other approaches for divesting Conoco have been preferable?
3. As a DuPont shareholder presented with the proposed split-off transaction in July 1999, what factors would you consider in deciding whether to exchange your shares for Conoco Class B shares?
4. Does it make sense for DuPont management to have structured the second-stage divestiture of Conoco as a split-off rather than as a conventional spin-off?
5. The Limited’s split-off of its Abercrombie & Fitch unit (described on page 6 of the case) was structured as a “modified Dutch auction.” Do you think this would have been a superior way to structure DuPont’s split-off of Conoco?
Please note: The closing trading prices of DuPont and Conoco Class A common stock on July 8, 1999 were $68.625 and $27.375, respectively.
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