Carlyle announces third big buy of the summer

DOVER, Del. — The DuPont Co. said Thursday that it is selling its performance coatings business for $4.9 billion in cash to the Carlyle Group, giving the Washington-based private equity firm another investment in the automotive and industrial segments.

The deal marks Carlyle’s third major acquisition of the summer, following a $3.5. billion purchase of United Technologies’ Hamilton Sundstrand subsidiary in July and the $3.3 billion buy of Getty Inc. stock-photo agency subsidiary earlier this month.

The stock of Carlyle, which recently went public, was up 9 cents to $25.88 Thursday after the deal was announced, while DuPont’s stock was off 36 cents to $49.58.

DuPont CEO Ellen Kullman said the sale of the performance coatings unit will allow the Wilmington, Del.-based company to focus on higher-growth, higher-margin businesses. Those include agriculture and nutrition, bio-based industrials, and advanced materials, which Ms. Kullman said are the foundation of DuPont’s long-term growth targets.

“The deal announced today is a continuation of the transformation of DuPont,” she told analysts in a conference call.

The performance coatings business, which caters to the automotive and industrial coatings sectors, has about 11,000 employees in more than 70 countries. The unit has net assets valued at about $2 billion and is expected to have 2012 sales of more than $4 billion. But its 2011 pretax margin of about 6 percent was the lowest of all business units in DuPont, which has a goal of a long-term compound annual growth rate of 12 percent earnings.

In acquiring the performance coatings unit, Carlyle also will assume $250 million of DuPont’s unfunded pension liabilities.

Carlyle’s investments in the automotive and industrial segments already include Allison Transmission, PQ Corp. and Hertz.

The deal with the Carlyle Group is expected to close in the first quarter of next year. Carlyle said the DuPont transaction will be funded with equity from U.S. buyout fund Carlyle Partners V and Carlyle Europe Partners III.