An activist investor has been pressuring the global chemical giant to divest itself of the 95-year-old club in Wilmington, Del., and the 104-year-old historic hotel, which the investor calls “examples of corporate largesse” that dilute shareholder value. A source “familiar with the process” said bids for the properties have been taken, but the company had no official comment.

 

The DuPont Co., the global chemical giant based in Wilmington, Del., is taking bids for the historic DuPont Country Club and the Hotel DuPont that it owns in the state’s largest city, The News Journal of Wilmington reported, citing “a source familiar with the process.”

The chemical company would not confirm if the properties were for sale or seeking new management, The News Journal reported. “We don’t comment on rumors or speculation,” said company spokesperson Dan Turner.

But the company had said earlier this month that it was open to the possibility of parting ways with the properties, The News Journal noted.

“DuPont continually reviews its portfolio of assets to determine ways to increase shareholder value,” Turner said.

Although little was known about the bidding process, The News Journal reported that a source had said bids had been due by April 15.

The 217-room Hotel du Pont has been a landmark in the heart of downtown Wilmington since it opened in 1911, and over the years it has welcomed a “who’s who of the world,” The News Journal noted, including former first lady Eleanor Roosevelt, President Harry S. Truman, President John F. Kennedy and first lady Jacqueline Kennedy, as well as Charles Lindbergh, Amelia Earhart, Oscar Hammerstein, Richard Rodgers, Duke Ellington, Ginger Rogers and Fred Astaire, Bette Davis, Katharine Hepburn, the Rev. Jesse Jackson and Jimmy Hoffa.

The hotel connects to DuPont’s former headquarters in downtown Wilmington and features a bar, restaurant and meeting facilities.

Established in 1920, the DuPont Country Club was formed as a recreational club for company employees. Initially, the club consisted of a two-story house, a baseball diamond and three tennis courts. By late 1922, a nine-hole golf course and eight tennis courts were constructed.

The club now has three 18-hole courses, including an executive, par-61 course and a championship course that was renovated in 2005, 19 outdoor Har-Tru tennis courts (10 of which are lighted) and six indoor hard courts.

Speculation about a possible sale of the properties began last fall, The News Journal reported, after activist investor Nelson Peltz called on the chemical company to reduce its non-core assets, including the country club and hotel.

Peltz, who leads New York hedge fund Trian Fund Management, which holds at least one percent of the chemical company, claimed DuPont’s hospitality holdings are a portion of excess costs that cost the company as much as $4 billion, The News Journal reported

In a September 16 letter to DuPont’s board, Peltz said the hotel, theater and country club are “examples of corporate largesse.”

Since Peltz launched a January proxy war to land four candidates on DuPont’s board, the company has begun divesting properties outside of its core chemical and technology base. DuPont said the moves are part of its own initiative to eliminate $1.3 billion of annual expenses by 2018.

In January, DuPont sold the 130-year DuPont Theatre, a Broadway-style playhouse. And it recently sold three parking lots near the Hotel du Pont. Financial terms of those transactions were not disclosed, The News Journal reported.

The parking lot sale began fueling speculation that it could be a precursor to DuPont finding a buyer for the hotel, it was noted.

The day after The News Journal’s report, the newspaper published an opinion piece by Ted Sullivan, a former U.S. Senator from Delaware, in which Sullivan described a meeting he had been a part of with Peltz, along with the editorial board of The News Journal.

“[Peltz] is obviously a smart guy, and I was impressed with the charts, graphs and numbers he threw out in his half-hour presentation,” Sullivan wrote. “He focused relentlessly on increasing shareholder value. But at the end, I was puzzled by what he was missing.

“Not once in his presentation to a Wilmington newspaper did he say anything about DuPont’s roots in and long-time commitment to the city and the state of Delaware,” Sullivan noted. “In fact, he seemed especially unhappy that the company owned a golf course, a playhouse, and a hotel.

“Someone on the editorial board pointed out that all three [of those properties[ operated at close to breakeven, and that they had long been important parts of the community,” Sullivan continued. “No, he insisted, it didn’t make any difference that they didn’t cost the company anything to speak of. A corporation should concentrate solely on its only mission: to increase stockholder equity.

“Mr. Peltz is certainly not alone in that view, but it is hard for me to square that with the reality of what Wilmington and DuPont have meant to each other for over 200 years,” Sullivan wrote. “Current management ought to remember what its predecessors built and make sure the company continues to make positive contributions to Delaware and the Wilmington community.”