Digging For Value In Spinoffs, Tender Offers, Arbitrage, Net Nets, Mutual Conversions and More.
April 1, 2013
Here are five stock spinoffs to keep an eye on this year:
1. Valero’s spinoff of retail division CST Brands. A recent post on StockSpinoffs.com noted that Valero Chief Financial Officer Mike Ciskowski said the company was waiting for an IRS ruling that the transaction would be tax free to shareholders and then the board would need to approve the spinoff. The company will then distribute 80% of CST to shareholders and sell the remaining 20% over the following year.
According to StockSpinoffs.com, Valero’s core refining business is thought to be holding back the full value of the retail division, which CST represents. On its own, CST would encompass more than 1,900 convenience stores and gas stations, including 1,032 in the United States.
2. News Corp.’s split into two companies. As we’ve written about previously, Rupert Murdoch’s News Corp. will split in two: one side will contain most of the newspapers and the Australian assets while the other side will encompass the cable channels, film studios and other entertainment assets. The Fox folks seem to be looking to build the cable side with a new sports channel and a new cable channel aimed at extending the FX brand.
But, as I noted in my earlier post, the hated newspaper assets may be the greater value in this spin.
3. Ingersoll Rand’s spinoff of its security business. Late last year, Ingersoll Rand announced that the company would combine its commercial and residential security businesses and spin them off to shareholders.
I like this one because it reminds me to two other recent spins that have done quite well: Fortune Brands’ security business (ticker:FBHS) and ADT (ticker:ADT), which was spun out by Tyco last year.
4. United Online’s spinoff of FTD. I previously owned United Online for the dividend but it always made me nervous because a good chunk of the company’s revenues depend on the dial-up Internet business (United owns NetZero and Juno). That’s obviously a melting iceberg so it’s a good thing they plan to spinoff FTD floral business into a stand-alone company but they’ve hit a few snags in the process. If it happens, FTD should be able to grow itself nicely without worrying about the legacy dial-up business dragging on its share price.
5. Murphy Oil’s spinoff of its downstream assets. This one has many of the same qualities as the Valero spinoff but Murphy also recently signed an agreement with Wal-Mart to open 200 new retail gas stations in its core market area of the Southeast and Midwestern United States.
What other spinoffs are you looking forward to this year?
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