JCI Johnson Controls International PLC

By Jacob Bunge And David Benoit 

DuPont Co. named Edward Breen as its permanent chairman and chief executive, appointing an outsider who investors expect will bring major changes to the agriculture-and-chemicals conglomerate.

The appointment also could signal a truce with activist investor Trian Fund Management LP, whose top executives in a meeting last month with DuPont's board conveyed support for Mr. Breen taking over, according to people familiar with the matter.

Mr. Breen, a DuPont board member and former CEO of Tyco International PLC who took over as DuPont's interim CEO last month after Ellen Kullman's sudden retirement , is expected to forge ahead with plans to reduce costs as DuPont contends with deep challenges in its main markets--and potentially to pursue deals that could transform the 213-year-old maker of Pioneer corn seeds and Kevlar fibers.

"Clearly, there's major change on the horizon," said Thomas Weary, chief investment officer at Lau Associates LLC, a suburban Wilmington, Del.-based firm that oversees about $500 million on behalf of investors, including members of the DuPont family.

Mr. Breen became a DuPont director in February as Ms. Kullman defended against Trian's proxy fight to gain seats on DuPont's board. Ms. Kullman during her tenure had started a series of cost cuts and sold or spun off two DuPont divisions to focus on higher-profit operations increasingly centered on food and agriculture. But Trian had pushed the company to go farther, including potentially splitting itself in two.

Last month's meeting was the first Trian has had with DuPont's whole board since Trian started engaging with the company in June 2013, the people familiar with the matter said. At the meeting, Trian Chief Executive Nelson Peltz and Chief Investment Officer Ed Garden pressed Mr. Breen and DuPont's other directors to respond to what Trian considers poor performance by the company, and outlined several strategic options they believe would create more long-term value, the people said.

Dennis Carey, a vice chairman at executive-recruiting firm Korn/Ferry International, said Mr. Breen's appointment is an opportunity for DuPont to reset relations with Trian, if not pursue all of the investment firm's ideas. "He will befriend Nelson [Peltz] in a way that's consistent with good corporate governance," said Mr. Carey, a longtime acquaintance of Mr. Breen.

Mr. Weary of Lau Associates said Mr. Breen's track record of overhauling Tyco--he twice broke up its businesses through spinoffs--and the potential for consolidation in the agriculture industry boost the odds that DuPont will separate out its seed-and-pesticide business, its biggest source of profit and revenue. "This may be the end of DuPont as you know it," he said.

Mr. Breen, through a DuPont spokesman, declined to comment. "He's spending his time and attention right now on internal meetings with teams focused on improving our business performance, cost structure, and evaluating strategic opportunities," the spokesman said. In the past, Mr. Breen has defended DuPont's structure and stressed that Tyco required "extreme measures."

Last month, though, Mr. Breen said he was discussing possible deals with executives at rival agriculture companies, many of which are considering mergers amid a three-year decline in crop prices that has pushed seed and pesticide prices down. DuPont is holding early-stage discussions with Dow Chemical Co. and Syngenta AG, The Wall Street Journal reported last week.

Mr. Breen, who also has been CEO of General Instrument Corp., had been widely seen as a contender to stay on as DuPont's leader. But his selection marks the first time the top executive position has gone to someone from outside DuPont, which traces its roots to gunpowder mills built by founder Éleuthère Irénée du Pont de Nemours near Wilmington. Previous DuPont CEOs either arose from the founding family or were promoted from within, including Ms. Kullman, who had decades of experience working across the company's divisions.

Rusty Robinson, president of Robinson Investment Group, said he expects Mr. Breen to consider splitting up DuPont's businesses to improve their competitive footing across DuPont's various industries. As part of that, "you could see lower profit margin companies of DuPont spun off and sold to private equity or venture capital companies," said Mr. Robinson, whose Brentwood, Tenn., firm owns about 57,000 DuPont shares.

DuPont's stock climbed 0.5% in Monday trading to $66.44, against a broad decline in U.S. stocks. The shares have risen about 30% since Ms. Kullman announced her resignation in early October.

Mr. Breen remains chairman at Tyco, which on Monday declined to discuss any potential plans to replace him. Mr. Breen is keeping his board seat at Comcast Corp., where he is lead independent director, a Comcast spokesman said.

Joann S. Lublin contributed to this article

Write to Jacob Bunge at jacob.bunge@wsj.com and David Benoit at david.benoit@wsj.com

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(END) Dow Jones Newswires

November 09, 2015 14:50 ET (19:50 GMT)

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