Housecleaning – Cleaning Up The Upcoming Spinoff List

The spinoff world is always changing and it takes a lot of effort to stay abreast of the news. As a result, it has been some time since we have checked in on some names which appear to have been buried at the bottom of the ‘Upcoming Spinoffs’ list. So here is our attempt at a little ‘spring cleaning’:

1) Arrayit Corporation (ARYC) – Back in late 2011, the company announced plans to spin off the majority of its stake in Arrayit Diagnostics. The Diagnostics subsidiary focused on an Ovarian Cancer test and was going to be run by John Howell. A short while later, a distribution date was set, but that never appeared to be consummated. In November 2012, the company filed an S-1 with plans to list the company and distribute its shares, but just a month or so later, the company announced that Mr. Howell was resigning from his position and withdrew the S-1 filing. While the parent company’s fortunes seemed to have improved over the past few days with some new funding, it doesn’t appear to be a spinoff candidate anymore.

Verdict: Remove

2) Tessera Technologies (TSRA) – the company announced back in mid-2011 that it was considering its options for its imaging and optics business, including a possible spinoff. The company has since been engaged in a lengthy battle with investment firm Starboard which it settled earlier this year. The agreement put six of Starboard’s nominees on the board compared to four from the company and I expect Starboard to push for moves to ‘unlock shareholder value’. The company has restructured its optics business a bit and sold its MicroOptics business, but no spin has been announced yet. The board recently incentivised its CEO to pursue a spinoff so I expect to see this name pop up sometime in the near future, but for now it probably makes sense to remove it.

Verdict: Remove

3) Orascom Construction (ORSDF) or now OCI N.V. (OCINY) – the Egyptian conglomerate announced a demerger of its fertilizer business back in late 2011. We provided an update back in mid-2012 after shareholders approved the move, but the company was still awaiting word from a government agency. A short while later the government claimed the company owed some taxes and made a whole bunch of threats against the company. Although the company insisted the claims were bogus, in order to avoid a protracted fight they ended up settling anyways. Can’t overlook these types of events when investing internationally and luckily these types of shenanigans don’t happen in developed markets like the US….oh wait.

Anyways…the company has since changed its domicile from Egypt to the Netherlands via an exchange and tender offer. It is still in the process of obtaining the remaining locally listed shares. According to its roadshow presentation, the change in domicile should provide the company with easier access to credit, better governance and enhanced growth opportunities. I guess Egypt isn’t so inspiring to investors these days. The company did recently list 25% of its stake in OCI Partners (OCIP), an MLP, but it looks like they plan on sticking with the fertilizer group for now so it’s time for this to leave the list. This might be revisited after the completion of the tender offer.

Verdict: Remove

So three names removed from the list, but our work on this is not done. Hopefully, we will get to the rest shortly, but feel free to drop us a line with anything we’ve missed or got wrong.

Disclosure: Author holds no position in any stock mentioned.

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