What’s going on here? DuPont announced a plan to split itself into three publicly traded companies, as the $33 billion industrial giant saw the merit of the classic “divide and conquer” strategy. What does this mean? DuPont is the latest of many US multinationals to take a trip to Splitsville. The maker of Styrofoam and Kevlar plans to divide its business into three distinct companies over the next two years, allowing each to have a specialized focus in the hope that’ll translate to higher revenue. DuPont will spin off its electronics and water segments, which brought in $4 billion and $1.5 billion of last year’s sales respectively. The remaining “New DuPont” – responsible for $6.6 billion in sales – will be left to concentrate on biopharma, medical devices, and high-profile brands like flame-resistant material Nomex. Why should I care? Zooming out: It’s time to focus. DuPont isn’t breaking new ground here: General Electric split into three ways last month, and Johnson & Johnson recently spun off divisions, too. While there are perks to keeping businesses together, like pooled costs, they can’t compete with the advantages of a smaller, more focused unit right now. See, fewer distractions and more flexibility allows leadership teams to make strategies more targeted. And the cherry on top is that a breakup can let a company get rid of layers of redundant, expensive management. The bigger picture: The sum of the whole. Investors will spend a lot on fast-growing businesses. The problem with big, bulky conglomerates, though, is that it’s tricky to untangle their different revenue streams and products from the outside. That makes it harder for investors to accurately value a firm, and the resulting uncertainty could scare them off. So by stripping out the complexities, costs, and admin that come with size, DuPont may well find that its individual businesses are valued higher as three parts than one whole. | 
