One year after its Chapter 11 filing and a decade after a private equity buyout, Avaya(AVYA) is, once again, a public company. The company had declared bankruptcy beset by $6.3 Billion in debt and mounting losses. In December, it completed its restructuring and began trading OTC. In January, less than a month later, Avaya stock gained a listing… Read More »
Last week, we noted a few examples of the ‘ugly spinoff’ phenomenon where really ugly looking spinoffs end up performing really well. These businesses often have dim growth prospects, low margins and are often initially larded up with debt or other legacy problems. Despite those challenges, the ‘bad business’ stocks often do well as the companies finally have… Read More »
It’s that time of year again where thanks to sites like Market Folly we mere mortals get to enjoy the vast wisdom contained in hedge fund year end letters. David Einhorn’s Greenlight Capital is always a good one to read although this past year was a challenging one for the value investor. The fund returned <2% in 2017… Read More »
Lets keep the momentum going and take a look at what is going on in the world of spinoffs: Blackhawk Networks (HAWK), a 2014 spinoff from Safeway (which has since been acquired), is being acquired by private equity firms Silver Lake and P2 Capital Partners for $3.5b or $45.25 per share. P2 Capital is already a shareholder with… Read More »
It was just one year ago when Biogen(BIIB) spun off hemophilia and blood disorder specialist Bioverativ(BIVV). With the stock trading in the 40s post-spin, we highlighted some disparate analyst opinions of the spin. The most bullish, Gabelli & Company, has a price target of $58 for Bioverativ stock. This past Friday, Bioverativ stock closed at $64.11, above Gabelli’s… Read More »
Jack In The Box (JACK) will sell Qdoba, its Mexican themed restaurant brand, to private equity firm Apollo Global Management for $305m cash. JACK actually acquired Qdoba for $45m back in 2003, so the company was able to do some nice things with it over the years. Unfortunately, the brand has struggled to grow recently and same store… Read More »
Delphi Automotive’s (DLPH) board of directors formally approved the spinoff of its powertrain business earlier this month and set today, December 4th as the distribution date. Shareholders as of November 22nd will receive 1 share of the new Delphi Technologies for every 3 shares of Delphi Automotive currently owned. Immediately after the spin, the parent company will rename… Read More »
Investors are taking gun and ammo manufacturer Vista Outdoor(VSTO) out back and shooting it. Vista stock, which was above $50 in July 2016, was down nearly 30% last week after an awful earnings report, and now trades just over $14. The company, which was spun off in 2015 by Alliance Techsystems as part of its Morris Trust merger… Read More »
Lets take a look at some recent spinoff news from the large asset manager: 1) Horizon Kinetics Likes Conduent (CNDT) At the very end of 2016, Xerox (XRX) spun off its business process outsourcing unit Conduent. After an initial dip, shares have recovered, but overall, the stock has mostly been flat since the spinoff. That isn’t a terrible outcome… Read More »
The election of the Trump administration seemingly brought new life to the coal industry and the companies still operating in the space are taking full advantage. One example is Consol Energy’s (CNX) plan to spinoff its coal assets in order to create a gas focused E&P company. The spinoff was formally approved by its board of directions last month and… Read More »
Every schoolchild is aware of the dangers of mixing water and electricity. Perhaps with this in mind, Pentair(PNR) will be spinning off its Electric division and retaining its Flow Control division. As every spinoff needs a gut-wrenchingly bad name with an even worse explanation of its meaning, the new company will be known as nVent Electric. Why? Beth… Read More »
Earlier this year Novartis (NVS) CEO Joe Jimenez said the company was considering a sale or a spinoff of Alcon, its surgical equipment and eye care business. The company paid a hefty penny (actually ~$50b worth of pennies) to acquire the business back in 2010, but as with a lot of M&A, things haven’t gone as planned. Many… Read More »
Lets close off the week with some happenings in the world of spinoffs: 1) Spinoffs Are Popular On The Johannesburg Exchange Every so often, a reader writes in to the site to let us know that our international coverage is weak (some use nicer language…others less nice). To which we reply thanks for reading and that volunteers are… Read More »
In this edition, we provide a few updates to some of our recent articles focusing on activist activities: 1) Sachem Head vs. Shire Pharmaceuticals (SHPG) Shire Pharmaceuticals announced this summer that it was considering its ‘strategic options’, including a potential spinoff, for its neuroscience division in order to better focus on its rare diseases business. Unfortunately, the company’s stock has… Read More »
The automotive space is undergoing a tremendous amount of change and the forecast calls for more turbulence. I mean, Google’s Waymo is advertising! It’s been interesting to watch the different approaches taken by the OEMs though. For example, GM (GM) has been very active in both electrification (despite the hype differential its Bolt outsells Tesla’s Model 3) and… Read More »