KAR Auction Services: Insurance Auto Auctions (Spin-Off) While the business has slowed in recent years with weak crop prices driving decreases in farmer income, it remains a good business with significant technology and distribution capabilities. These products help improve crop yields and farmers’ profitability. ![]() They completed the spin-off of the commodity chemical business Dow, on April 1, 2019, and are set to spin-off the agriculture business, Corteva, in the first week of June.Ĭorteva will generate ~$14 billion in revenue and provide seeds (~56% of sales) and crop protection chemicals (~44% of sales), as well as a variety of software solutions to farmers. Management expects the spin-off to be completed after the market close on May 22, 2019, with VF shareholders receiving one share of Kontoor Brands common stock for every seven shares of VF common stock held.ĭowDuPont is a large global chemical conglomerate formed in 2017 from the merger of Dow and DuPont. The new company will generate approximately $2.7 billion in revenue and own the Wrangler, Lee, and Rock & Republic brands as well as the VF Outlet business. In August 2018, they announced the plan to spin-off the Jeanswear business as a separate company to be named Kontoor Brands. based apparel company with revenues approaching $14 billion. However, investors must carefully weigh some risks, such as pricing pressure in more mature products and disruption within the traditional sales channels. Alcon is fundamentally a good business and should benefit from a handful of long-term secular growth drivers. Their solutions help eye care professionals treat refractive errors, presbyopia, dry eye, cataracts, retinal diseases, and glaucoma. The spin-off closed on April 9th.Īlcon develops, manufactures, and sells ophthalmic products and equipment for various surgical procedures, as well as contact lenses and other ocular health products. Alcon is one of the largest eye care companies in the world and generates ~$7.1 billion of net sales. In June 2018, they announced the plan to spin-off one of their segments, Alcon, into a separately-traded stand-alone company. Novartis is a Basel, Switzerland based healthcare company that generates net sales of ~$52 billion. The main business driver for this commodity business is the difference between feedstock costs and the price received for their end products (“crack spread”). They have large fixed assets around the globe, as well as JVs with strategic partners in cost-advantaged locations. generated pro forma revenue of about $49 billion and operating EBIT of nearly $6.2 billion in 2018. Dow is a large global commodity chemical business that manufactures products throughout the chemical value chain.ĭow Inc. The Dow spin-off closed on April 1st and began trading as a stand-alone entity on April 2nd. Closed Spin-Off Transactions:ĭowDuPont is a huge global chemical conglomerate formed in 2017 from the merger of Dow and DuPont. The transaction is expected to close in early 2020. Ingersoll-Rand’s remaining Climate segment will take a new name and be a pure-play HVAC and refrigeration company. The combined company will be 50.1% owned by existing Ingersoll- Rand shareholders and 49.9% owned by Gardner Denver shareholders. This new company will operate under the Ingersoll-Rand name. ![]() On April 30 th, they announced the plan to spin-off and merge the industrial segment with Gardner Denver through a Reverse Morris Trust transaction. In the Industrial business, they have strong positions in compressed air and gas systems, as well as power tools and fluid management systems. In the Climate business, they have leading market positions in HVAC systems with the Trane and American Standard brands, as well as in transportation refrigeration with the Thermo King brand. Ingersoll-Rand is a diversified industrial company that focuses on products and services to improve the quality and comfort of air in homes and buildings, transport food and perishables, and increase industrial productivity and efficiency. Ingersoll-Rand: Industrial Segment (Spin-Off) ![]() This article not only reviews these transactions, but also discusses upcoming spin-offs, the spin-off pipeline, and potential spin-offs. One new transaction was announced (Ingersoll-Rand) and two spin-offs closed (Dow and Alcon). As a result, spin-offs have historically performed quite well and frequently represent some of the most compelling opportunities available for active investors.Īpril was a busy month for spin-offs. Corporations execute these transactions for many different reasons, including improving strategic focus, closing a valuation discount, removing conflicts of interest, evolving capital allocation priorities, and better-aligning investor bases. A stock spin-off is the formation of a new, independent company via the distribution of shares from the parent company.
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