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Alexander Korda

VFC: Value Release as it Drops Kontoor Brands

As the jeans space heats up with companies rushing to the market like Levi Strauss & Co. (LEVI), Kontoor Brands, Inc. (KTB) and The Gap, Inc. (GPS), we believe longer-term, both VF Corp. (VFC) ex-Spin and KTB look interesting as an investment. As we have seen time and again with some recent Spinoffs (particularly in the US), listing a company with debt with a short-term index play due to the Spinoff’s size is a recipe for a sell-off from its first few days of normal trading. What's Happening? The Spinoff will create a high-growth, high-margin business for VFC (Parent, ex-Spin) focused on its ...

Alexander Korda

NCR Takeover Scenario Playing Out for Investors

In what seems to be a win for investors, ATM and point-of-sale terminal maker NCR Corp. (NCR) has been approached for a takeover by private equity firms (as of yet unnamed). This pushes the stock closer to our January takeover scenario valuation, though the company has not formally committed to selling itself. Read on for more details on the previous activism attempts and our potential Spinoff/sale scenarios. What's Interesting? The Edge Intelligence... Not New to Spinoffs: TDC Performance Outlined Bleeding Hardware Segment: Significant Revenue Decline Software & Services Segments: Key Growth...

Alexander Korda

Scenarios Analyzed as Fitness/Billiards Separation Reaches Final Stages

Brunswick Corp.'s (BC) upcoming split with its Life Fitness and legacy billiards businesses, originally planned as a Spinoff, is now looking more likely to be sold instead, given current market conditions and potential value creation opportunities available to the 173-year-old boatmaker. In this analysis, we take a look at the likely valuations involved in either scenario (Spin or sale), and examine exactly what brought the company to this decision. What's Happening? The Edge Intelligence... On March 1, 2018, Brunswick Corp. (BC) announced the Spinoff of Life Fitness Holdings, Inc. following ...

Alexander Korda

Historic Split of Scandinavia’s Largest Media Group, Parent Retains Stake in Spinoff

The fast-growing online classifieds space gained a new player on Wednesday with Adevinta ASA (ADEB NO) hitting the European market following its distribution from Parent Schibsted ASA (SCHB NO). In a positive move to participate in the new company's growth prospects, SCHB plans to retain a ~60% stake in ADEB with the opportunity to monetize that stake later on. Meanwhile, both companies will benefit from industry veterans at the helm. The Edge View... Schibsted Media Group ASA (SCHB) announced the separation of its international marketplaces business on September 18, 2018, which directly resu...

Alexander Korda

Forced Spinoff Creates Post-Spin Opportunity

A.P. Moller-Maersk A/S (MAERSKB DC) has become part of the recent global trend of conglomerates divesting and Spinning off assets to focus on their core business (DWDP, NPN, NOVN to name a few). In this case, the 115-year-old Danish conglomerate will be Spinning off its drilling operations unit called The Drilling Co. of 1972 A/S (DRLCO DC) this week (April 4, 2019). What's Interesting? The Edge Intelligence... In-line with the holding family’s vision of removing oil and oil-related businesses to focus on its core Transportation & Logistics businesses, A.P. Moller-Maersk A/S (MAERSKB DC) anno...

Alexander Korda

CEO Moves to Small-Cap R&D Spinoff Reflects Confidence

The last biotech Spinoff was in June 2017 where Actelion (ATLS) in Switzerland Spun off its clinical R&D arm, Idorsia (IDIA). In IDIA’s first year, the stock doubled, significantly outperforming the healthcare index at the time. Almost 2 years later, Ironwood Pharmaceuticals, Inc. (IRWD) will be Spinning off its rare diseases R&D segment, Cyclerion Therapuetics (CYCN) on April 2, 2019. For those who can look at this small cap biotech name, we are encouraged by the fact that the CEO is going to run the Spinoff and there is an proven biotech activist in the name. What’s Interesting? With a limi...

Alexander Korda

Here's How to Take Advantage of the Peeling Onion that is DowDuPont

Anticipated by the market since the mega-merger of Dow and DuPont in 2017, the three-way split will take its first step with the separation of Dow, Inc. (DOW) on April 1, 2019. As a result, DOW will enter the S&P 500 Index (replacing MetLife's Spinoff Brighthouse Financial, BHF), and DWDP continues down its break-up path to June's distribution of Corteva, Inc. (CTVA). The Edge View... DWDP (Parent, ex-Spins): We remain positive on DWDP (ex-DOW & CTVA) considering its higher margin profile compared to the other businesses included in the combined DWDP (FY18 adjusted of 28.4% vs. DOW’s 18.3% an...

Alexander Korda

Buying Opportunity Post Spin With Novartis’ Eye Care Business

The Spinoff of the world’s largest eye-care business, Alcon, Inc. (ALC), is just one of four major strategic transactions Novartis AG (NOVN) has made over the last year, with CEO Narasimhan ramping up the focus on its core leading medicines. New numbers prompted our update to the analysis however, we believe there can be a better entry point into this situation post-Spin. What's Interesting? The Edge Intelligence... After having a connection for more than 10-years, Novartis AG (NOVN), the Swiss pharmaceutical giant, will be spinning off its previously acquired and the world’s largest eye-care...

Alexander Korda

Insider Buying at ARNC Warrants Further Investigation

Arconic, Inc. (ARNC) is on our radar for a new reason (beyond being on the Spinoffs calendar of 30 stocks): its new CEO John Plant bought $4m shares on the open market, the first significant boost to his personal shareholding at any of the companies he's led. We take a closer look at his track record, as well as the involvement of activist investor Elliott Management. What's Interesting? The Edge Ingredients... The market may not seem to like this major aluminum player in terms of total return since its split with the upstream operations (Alcoa Corp., AA) in November 2016, but by all indicati...

Alexander Korda

One-of-a-Kind Insurance Auctions Biz Receives New Valuations After Recent Filings

KAR Auction Services, Inc. (KAR) has submitted updated filings for its Spin of Insurance Auto Auctions, Inc. (IAA), which is expected for Q1 or early Q2 2019. With these new numbers, we've updated our valuations for the pre- and post-Spin entities ahead of the separation. Following the Spinoff, KAR will focus on its niche used vehicle auction services (comprised of ADESA and AFC segments), while IAA will be the first publicly traded insurance auction company on the market. The Edge View... KAR Auction Services, Inc. (KAR, Parent), a niche player in the field of online auto auctions, announced...

Alexander Korda

Disney's Goliath Content Arm Grows Further as Fox Slims Down to Sports & News

The upcoming situation will see the mega-merger of Twenty-First Century Fox, Inc.'s (FOXA) entertainment assets with The Walt Disney Co. (DIS), resulting in a powerhouse of content creation and distribution. Alongside this, and prompted by a bevy of international regulatory conditions, FOXA must Spinoff its Sports & News segment into Fox Corp. (FOX), which we believe is a takeover target in the long-term for any larger media company looking for more broadcasting exposure. The Major Post-Situation Players... The Walt Disney Co. (DIS, post-acquisition of FOXA): The company re-organized its busi...

Alexander Korda

Leader in Emerging E-Sports Space Separates Traditional TV Broadcasting Segment

Global digital entertainment business Modern Times Group AB (MTGB SS) prepares to finalize the distribution of its traditional broadcasting business Nordic Entertainment Group AB (NENTB SS) following a failed sale of the segment. This is the second stage in the cross-ownership situation that saw Kinnevik AB (KINVB SS) divest its holdings in MTGB, thus allowing latter's separation of NENTB and continued evolution into a pure-play e-sports leader. What's Interesting? The Edge Intelligence... Swedish entertainment company Modern Times Group AB (MTGB SS) will separate its traditional broadcasting...

Alexander Korda

Last IPO-Spin for 2019 of Pure-Play Lithium Producer

With Livent Corp. (LTHM) trading at a 15% free-float for the last 4 months, the stock price has seen a -26% drop from its IPO price, underperforming its peers over this period. However, with its Parent FMC Corp. (FMC) distributing the rest of its stake to shareholders tomorrow, this bodes well for the pure-play lithium producer. The Edge Intelligence... Philadelphia-based FMC Corp. (FMC) first began its restructuring phase when the company did a deal with DowDuPont (DWDP) and selling its Health and Nutrition line to DWDP while FMC acquired a significant portion of DWDP’s crop protection busin...

Alexander Korda

Major Restructuring at Swiss Pharma Giant Creates World's Largest Eye-Care Company

The upcoming annual general meeting (Feb 28th) will likely give further clarity for the upcoming Spinoff of the world’s largest eye-care business, Alcon, Inc. (ALC). This Spinoff will be the 4th major strategic transaction over the last year for Novartis (NOVN) as CEO Narasimhan ramps up the focus as a leading medicines company. What's Interesting? The Edge Intelligence... Novartis AG (NYSE: NVS; SIX: NOVN), the Swiss pharmaceutical giant, will be spinning off its previously acquired (after securing 100% ownership over a number of stake purchase for $52bn on April 8, 2011 from Nestlé) and the...

Alexander Korda

Spinoff From Global Entertainment Group Set For Organic Growth

For those who are unfamiliar with the name, it’s worth getting used to. Naspers Ltd (NPN SJ) is not only the biggest African company but is transforming itself into a global investment internet and entertainment company. With considerable investments in some of the world’s leading internet platforms (such as China’s Tencent), NPN will be Spinning off Africa’s leading pay-tv player, MultiChoice Group (MCG), to unlock value for shareholders. What's Interesting? The Edge Intelligence... Once a media and internet company to now a diversified global investment company in internet and entertainment...

Alexander Korda

UK Restructuring at Play with Separation of Cash Solutions Business

In a payments landscape dominated by digital options, G4S Plc (GFS LN) announced on December 13, 2018 a strategic review of the separation (through either a Spinoff or IPO) of its Cash Solutions business, which includes Cash 360 machines operated by retailers and the cash transport operations. We believe the separation will bring growth and increased focus to both businesses, unlocking substantial shareholder value in the long-term. What's Happening? The Edge Ingredients... G4S Plc (GFS LN), the world’s leading international security solutions group with a presence across more than 90 geograp...

Alexander Korda

Updated Analysis Following Release of Pro-Forma Numbers Ahead of Upcoming RMT

We have updated our analysis on Henry Schein, Inc. (HSIC) and its upcoming Spin-Merger of its animal health distribution segment (to merge with private Vets First Choice) to form Covetrus, Inc. (CVET), the first pure-play animal health distribution company. New filings have increased clarity on how this situation will play out, as well as revised timing for the Spin-merger. What's Interesting? The Edge Intelligence... In-line with previous successful animal healthcare separations like Zoetis, Inc. (ZTS, which tripled its share price in the last 5 years) and Elanco Animal Health, Inc. (ELAN, ...

Alexander Korda

Persistent Weakness and Long-Term Underperformance Indicates Time for Change

Global telecom giant AT&T, Inc. (T) has consistently underperformed both peers and the index over the past two and three years, and the recently closed acquisition of Time Warner, Inc. in June 2018 has saddled the company with a total debt of $183bn (much higher than its peers). What can T do to improve its position in a brutally competitive media industry? We believe improved shareholder returns can be made through a three-way break-up. What's Interesting? The Edge Ingredients... Based on total shareholder return (TSR) for the last 1-yr, 2-yr and 3-yr annualized, AT&T has lagged all of its p...

Alexander Korda

3 Names in 2019 Prime for a Break-Up

We initially screened for three companies with potential for value creation through future break-ups, and have refreshed our views on these large-cap names. We believe they have the right ingredients for value creation but need activist involvement to help move things in the right direction, including through pushing the management to explore strategic alternatives. The Edge Ingredients... We believe identifying the ingredients for corporate change is crucial when evaluating if a given company can leverage on potential opportunities that may arise from corporate change. Continuing our previou...

Alexander Korda

2020 Three-Way Break-Up Overview with Updated Combined Valuation

Following the trend of large industrial conglomerate break-ups (like Honeywell, DowDuPont, and GE), United Technologies Corp. (UTX) announced plans November 27, 2018 for a long-anticipated split, separating into three companies consisting of the core aerospace, elevators and building divisions. The separation is expected to be completed in 2020, creating a pure-play aerospace UTX in the process. The Edge View (UTX, Parent ex-Spins)... Post-Spin, UTX will primarily consist of the core Pratt & Whitney engines business and Collins Aerospace (formed after the recently concluded merger of UTC Aero...

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