The spinoff also represents the beginning of a new era of corporate governance for Kimball as its dual share class structure will be eliminated. Currently, the founding family controls a hefty amount of the company’s Class A shares which hold special rights and elect the majority of the board of directors. That will change because enough Class A shareholders have pledged to convert their shares into Class B shares in order to trip a forced conversion trigger for the entire share class. As a result of becoming a single share class entity, Kimball International will change its ticker to ‘KBAL’ from ‘KBALB’ after the spinoff.
Post spinoff, Kimball International will continue to operate its furniture business and the new company will specialize in manufacturing ‘durable electronics for the medical, automotive, industrial and public safety markets.’ Kimball Electronics will be headquartered in Jasper, IN, but the company has operations throughout the globe. Despite that fact, the company still thinks there are plenty of locations it hasn’t reached yet and as such, a big part of its growth strategy is to expand its ‘global footprint’. Strong management is key in this business and many current electronics executives will have leadership positions at the new company including new CEO and Chairman Donald Charron. Unlike many other recent spinoffs, Kimball Electronics is expected to begin its life with a clean balance sheet and will not be saddled with any debt in order to fund a big dividend payment to the parent company.
For additional information, check out the most recent Form 10.
Disclosure: Author holds no position in any stock mentioned.