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Valero Completes CST Brands Spinoff

By
Spin Doctor
– May 2, 2013Posted in: Stock Spinoffs

It’s official folks. Valero (VLO) completed the spinoff of CST Brands (CST) and the company began trading today as an independent entity on the NYSE. The new company operates in the US & Canada as an independent retailer of fuel and convenience merchandise while Valero is now a “more-focused refining, wholesale marketing, and alternative fuels company.” The Motley Fool’s Jim Royal is pretty excited about this one and has already bought into the company. Not that this means much, but CST was down slightly while Valero was up over 4.5% today (as of this writing). Valero may not be done though. During its earnings call earlier this week, the company brought up the possibility of also spinning off its midstream operations into an MLP after the CST transaction was completed. Several other companies have already successfully pursued this strategy so it is no surprise that Valero is considering the move. We will keep you updated if this progresses from idea to action. For all of our earlier coverage of the CST Brands spinoff, click here. Disclosure: Author holds no position in any stock mentioned. Related articles Valero Set To Spin Off CST Brands on May 1 To Shareholders Of Record On April 19 (stockspinoffs.com) [...]

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Munich Court Gives Osram Spin The Go Ahead

By
Spin Doctor
– April 30, 2013Posted in: Stock Spinoffs

Well that didn’t take long to get back on track. After shareholders overwhelmingly approved Siemens’ (SI) Osram lighting spinoff, the transaction was quickly derailed by a lawsuit. A small group of shareholders claimed the meeting was invalid due to acoustics issues, a charge which Siemens considered ’without merit’. A Munich judge agreed with the company and tossed the complaint stating the shareholders “did not participate adequately in the AGM.” I know the US gets a bad rap for being a litigious society – and we are no legal experts here – but this case seemed pretty soft. While the spin will no longer take place in April (obviously), I would expect this to get back on track shortly. This could be interesting as the lighting industry is going through quite the transformation as LED lights become more mainstream and Osram will likely be one of the major players in the space. Cree (CREE), one of the leaders in LED lighting, has seen its share price explode this year (despite a recent earnings hiccup) as growth in the lighting sector continues to pick up. There should be some additional information later this week when Siemens issues its earnings report As a reminder, Siemens shareholders will receive 1 [...]

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Mondelez International Attracting Big Name Investors Like Ackman and Peltz

By
Spin Doctor
– April 23, 2013Posted in: Stock Spinoffs

News of Nelson Peltz’s Trian Fund Management ridding itself of all Kraft related positions turned out to be off…very off. In an amended Q4 13F filing released last week, the hedge fund revealed a large stake of over 19 million shares (a bit more than $600m worth) in Kraft’s international snacks spinoff Mondelez International (MDLZ). There was still no position listed for the Kraft Foods Group (KRFT) so he must have unloaded that one. Based on that info and the ~8m pre-spin Kraft shares Trian owned in its September 30th filing, it is possible (not that it really matters) that the fund upped its stake in MDLZ post-spin. The amended filing also revealed that the fund had accumulated a sizeable new stake in PepsiCo (PEP). How could these positions just appear months later? In the original 13F filing, the fund noted that some ‘confidential information’ was omitted. I am not an expert on SEC filings (perhaps a reader can offer more insight), but this page on the SEC website notes that managers can request for information to be omitted in a 13F filing (although it still must be submitted to the SEC) for various reasons including risk arbitrage or to protect [...]

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DE Master Blenders Scooped Up By JAB Led Group

By
Spin Doctor
– April 22, 2013Posted in: Stock Spinoffs

When discussing spinoffs, analysts often toss in a comment about how the new slimmed and focused companies will be more attractive acquisition targets. After all, who doesn’t like the idea of a relatively quick exit with a nice premium? Sometimes they are right though and the most recent one to be acquired is Sara Lee spin DE Master Blenders 1753 (OTC:DEMBF). In case you don’t recall, the Sara Lee name was dropped last year when the company split into a meats & food service focused business – Hillshire Brands Companies (HSH) – and an international coffee & tea business, DE Master Blenders 1753. The coffee company had some accounting issues earlier on in Brazil and performance was relatively flat in 2012. The stock popped though when word of a potential tie up with an investor group led by Joh A Benckiser (JAB) leaked at the end of March. The price thrown about was €12.75, but a board supported €12.50 cash offer came in shortly thereafter. JAB, a privately held holding company, already owned ~15% of the company’s shares and the acquisition of DE Master Blenders represents a further leap into the coffee & tea space by the firm which had previously snatched up both [...]

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Smithfield Foods Urged To Stop Pigging Out And Consider Breakup By Continental Grains- Wants More Bacon Brought Home

By
Spin Doctor
– March 12, 2013Posted in: Stock Spinoffs

Another day, another story about a large shareholder pushing for a breakup. The latest target is pork company Smithfield Foods (SFD) which received a letter from one of its larger shareholders, Continental Grains, urging the company to hire an outside adviser and to consider ‘strategic changes’ including the possible breakup into three separate companies. Continental argues that since the company engages in three different areas – hog production, fresh & packaged meats and international – with different characteristics, a spinoff would create value. The company’s full letter to the board can be found in a recent 13D filing. Continental has been a large shareholder of the company for many years and currently controls ~6% of the shares outstanding. As part of its justification, Continental noted that since the current management team took control of Smithfield, the company’s stock price has woefully underperformed its peers, it has paid no cash dividends all while highly compensating its executives for this performance. The company wants management to start getting serious ‘about creating shareholder value’ and in addition to hiring an advisor, it urges the company to return more capital to shareholders, to add more experienced board members and to better link management compensation to shareholder value creation. [...]

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Some Bullishness On The Crimson Wine Group

By
Spin Doctor
– March 11, 2013Posted in: Stock Spinoffs

A quick update on a recent spinoff. Leucadia (LUK) completed the spinoff of Crimson Wine Group (OTC:CWGL) a few weeks ago and the new company has jumped around a bit as an independent company. A lot of people were down on the company and many of the comments on our earlier articles pointed to the company’s poor recent earnings, expected high P/E ratio and low book value as reasons to stay away. Not everyone is down on the company though and this piece on the recovering wine industry notes that Crimson President and CEO Erle Martin ‘expects the company to double in size to a half-million cases and about $100 million in sales by 2016.’ Not bad at all, especially if the company can achieve this while also maintaining its recently improved gross margins. Now I am sure most of you are probably thinking that this doesn’t matter since the President & CEO of a company is supposed to be bullish…that is his job! Fair enough, but its still worth noting what management’s expectations are for the business. Mr. Martin isn’t the only one excited about the company’s prospects though. A reader recently sent us a link to this excellent guest post by [...]

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Illinois Tool Works Explores Options For Industrial Packaging

By
Spin Doctor
– February 25, 2013Posted in: Stock Spinoffs

Illinois Tool Works (ITW) has been going through quite the transformation over the past year or so after being egged on by activist investor Ralph Whitworth. The company sold a 51% stake in its decorative surfaces division last year and last week it announced that it was ‘exploring strategic alternatives’ for its industrial packing unit. This seems to fit with its strategy of unloading commodity-driven businesses which are below average profit-wise. The packaging unit ‘designs and manufactures steel, plastic, and paper products used for bundling, shipping, and protecting transported goods’ and generated $2.4b in revenues in 2012. The strategic options being explored include both a spinoff to shareholders and a sale. A final decision shouldn’t be expected for awhile though as the review process ‘will last through the remainder of 2013′. Since the company has publicly announced this process, it is quite possible that potential buyers might reach out to ITW sooner. Contrary to most recent strategic announcements, ITW was only up slightly on the news. Another victory for Mr. Whitworth’s Relational Investors who has been rather busy recently having pushed for spinoffs at L-3 (LLL), ITT  (ITT) and more recently at Timken (TKR). We will keep you updated as this situation [...]

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Grounded! American Eagle’s Fate Still TBD Amidst Post-Bankruptcy Merger

By
Spin Doctor
– February 20, 2013Posted in: Stock Spinoffs

M&A is back. Last week witnessed the return of some rather large deals including the $11b US Airways (LCC) takeover of AMR (AAMRQ), parent of American Airlines. The deal is expected to close later this year and you can click here for more details on the transaction. One of the many issues which remain to be sorted out is the fate of American’s regional jet unit, American Eagle. The airline had planned on spinning it out into a standalone company, but its bankruptcy filing put that move on ice. Eagle CEO Dan Garton is still hopeful for such a move, but understands that the new bosses will likely ‘need to take a fresh look at it’. In the meantime, Eagle’s priorities are “developing a new aircraft-fleet plan and exploring how the partners’ regional operations can be “blended.” US Airways already owns other regional units such as PSA Airlines and Piedmont Airlines and the company also outsources flights under the US Airways Express name. The plan for now is to keep all three separate, but integration is likely in the future. Within the same WSJ piece linked to above, Mr. Garton acknowledged that any decision about Eagle is likely ‘down the [...]

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13F Time: Bill Ackman Sells Alexander & Baldwin, Nelson Peltz Sells Kraft and Mondelez, Dan Loeb Buys Abbott and AbbVie

By
Spin Doctor
– February 19, 2013Posted in: Stock Spinoffs

13F season is always fun as it provides a rare (albeit delayed) glimpse into the thinking of large money managers and hedge funds. Of course, due to the significant time lag (~45 days), the exclusion of certain securities (shorts, derivatives etc.) and varying investment strategies and holding periods, the usefulness of such data is…questionable in many cases. Not always though and still fun to go through. Not surprisingly, the latest batch of filings reveals a bunch of spin related names. Here are some examples: 1) Pershing Square, the hedge fun run by Bill Ackman no longer has a stake in Alexander & Baldwin (ALEX). The Hawaiian real estate company has been doing rather well lately. Given the amount of time he is spending fighting off the naysayers (this catfight with Carl Icahn is worth watching) on his Herbalife (HLF) position, it’s a wonder he can focus on anything else. 2) Speaking of Herbalife, one of the managers on the other side of Mr. Ackman’s trade is Dan Loeb, who recently initiated positions in the largest spin of the new year, Abbott (ABT)/Abbvie (ABBV). 3) Nelson Peltz’ Trian Fund Management used to be one of the largest shareholders of Kraft, but [...]

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Dean Foods Confirms Plans To Spinoff WhiteWave This Year

By
Spin Doctor
– February 15, 2013Posted in: Stock Spinoffs

Some more spinoff news from the current earnings season. Dean Foods (DF) reported disappointing Q4 numbers, but buried within the press release were plans for its ~86% stake in the WhiteWave Foods Company (WWAV). Dean plans on spinning off a chunk of those shares to shareholders in a tax free transaction after its lockup period expires, likely at the end of May. Interestingly, the company revealed that it still intends to hang on to ~20% of the shares which it may release another time. I wonder if it has anything to do with the fact that after unloading its Morningstar business, Dean’s main operations, Fresh Dairy Direct, are mostly exposed to milk, which it readily admits is witnessing declining volumes year over year. Calculating its stake and share of WWAV’s market cap, WhiteWave accounts for the majority of its share price. In case you don’t remember, WWAV was once a fully owned subsidiary of Dean, until the parent decided to offer about 14% of the shares in an IPO at the end of October. WWAV was highly anticipated, pricing above range at $17, mainly because it is focused on the faster growing soy and organic segments. Unfortunately, the company’s shares [...]

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