Stock Spin-off Resources
Just a heads-up, I recently published an updated stock spin-off resources page.
I include a bunch of information including:
- A one page “What is a Spin-off?” guide
- Links to 11 stock spin-offs studies and articles (BCG, McKinsey, Credit Suisse, J.P. Morgan and many others)
You can check it out here.
Last month, I launched a premium stock spin-off service. For $29 per month, I cherry pick the most promising stock spin-off investments for your benefit. You can expect 5 to 10 recommendations per year. The service includes detailed investment cases for all recommendations and a weekly newsletter with investment updates. Sign up here. Now is a great time to sign up as I will be raising prices this fall.
KLX Inc. (KLXI), which is in the process of being acquired by Boeing (deal was recently approved), will be spinning out its energy services business, KLX Energy Services (KLXE), in the middle of September. First day of trading will be September 17, 2018. At first impression, it looks pretty interesting. Members can access my preliminary thoughts/valuation here.
Recently Announced Spin-offs
In the past month, there have been 6 new spin-off announcements. Remember to check our stock spin-off calendar for the latest information on spin-offs that have been announced.
On July 17, Continental Corp. (ETR: CON) announced that it would be spinning off its Powertrain business. Continental expects to complete a partial IPO in the middle of 2019, but retain control of the new public company. This announcement is consistent with trends in the auto supplier market to separate the faster growth electronics/autonomous driving units (Aptiv/Veoneer) from the slower growth traditional businesses. (Delphi Technologies and AutoLiv).
On July 19, Danaher (DHR) announced that it would be spinning off its Dental business. Expected timing is Q4 2019. Full details here.
On July 24, Eli Lilly (LLY) announced that it would be spinning off its Animal Health business. LLY will be filing an IPO for less than a 20% stake in the Animal Health company. LLY expects to distribute the remaining shares to shareholders through a tax free spin-off subsequent to the IPO. Usually the distribution must occur at least 6 months after the IPO for tax purposes. For more information, check out our resource page.
On August 9, Perrigo (PRGO) announced that it would be separating its pharmaceutical business. Potential options include a tax free spin-off, merger, or sale. Expected timing is Q3 2019. More information is available here.
On August 13, VF Corp (VFC) announced that it would be spinning off its Denim business. Expected timing is Q3 2019. More details can be found on our resources page.
On August 19, A.P. Moeller-Maersk (CPH: MAERSK-B) announced that it would be spinning off its Oil Drilling business. Expected timing is Q3 2019.
Spin-off News and Analysis
I analyzed Wyndham Hotels (WH) with a detailed 8 page write up. It is available for members here.
Barron’s published a good short article recently called Autoliv and Delphi: A Tale of Two Spinoffs. Autoliv recently split into two companies. Autoliv (newco) will focus on the lower growth passive safety market (seatbelts, airbag systems, etc.) while the spin-off, Veoneer, will focus on the faster growing active safety systems that use lasers, cameras, artificial intelligence, etc. to prevent accidents. Delphi Automotive also split the company in two. It spun out its engine components business into Delphi Technologies (DLPH) and retained its active safety business, but changed its name to Aptiv (APTV). The companies focused on autonomous driving (Veoneer and Aptiv) have performed well so far, but Barron’s argues that AutoLiv and Delphi Technologies are the better buy now as they are taking share from bankrupt Takara and trading at cheap valuations. It’s definitely worth a quick read.
Brighthouse Financial (BHF) is trading at ~5x earnings and 0.37x Book Value. Is it a buy? I review the bull and bear case in a piece only available for members. Check it out.
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