A few short hits for a December Friday:
- By now, everyone has read about the proposed ‘mega merger of equals’ between Dow Chemical (DOW) and DuPont (DD) and the subsequent breakup into three separate companies (agriculture, specialty products and materials). One question worth pondering is how does it actually avoid the tax man? It sure seems like a step transaction, which is something the IRS usually frowns upon. The New York Times’ Dealbook takes a look at the deal’s ‘tax acrobatics’ and concludes that investors ‘should raise a glass to the lawyers’ for nicely exploiting some fine print in the tax code. It seems that the fact that both companies share a significant amount of shareholders helps the case. Perhaps in addition to the lawyers, investors should also raise a glass to the rise of passive investors and ETFs?
- Starwood (HOT) interim CEO Adam Aron is leaving the company to become CEO of AMC Entertainment Holdings (AMC). That was quick! Talk about coming in to do a job and then getting out! To recap – Starwood ousted CEO Frits van Paasschen shortly after announcing the spinoff of its timeshare business back in February. The sentiment at the time was that he hadn’t been aggressive in pursuing deals and growing the brand. Mr. Aron, then a board member, was named interim CEO and in less than a year he a) scrapped the spinoff by merging the timeshare business with ILG b) sold the rest of the company to Marriott International (MAR) in a deal for $12.2b and c) bolted for a new opportunity. The deal with Marriott obviously hasn’t closed, but his prospects there must not have been so great. Mr. Aron will be replaced by EVP and CFO Thomas Mangas, who will shepherd the company through the closing and happily collect his change of control bonuses. On that note, it seems like the opportunity at AMC was too great for Mr. Aron to pass up even if all of the bonuses and stock were to vest (here is his employment agreement). Also, AMC was a good fit as Mr. Aron had a non-compete that would have lasted a few more months keeping him out of any competitor of Starwood.Regardless, it has been quite a year for the man. What will he do in 2016? Maybe it’s worth looking into AMC…the shares did pop over 5% on the announcement.
Disclosure: Author holds no position in any stock mentioned but is still bummed about his beloved Starwood Preferred Guest Program getting rolled into Marriott.