Investor risk with United Technologies disposal / spinoff of its Sikorsky asset says advisor The Edge, Future Spinoffs predicted
May 21, 2015
New York, Reuters, May 21, 2015: According to The Edge Group, a specialist advisor of research intelligence to large value and activist investors, Sikorsky’s low margin, takeover target business, together with the alternative option of avoiding an immediate heavy tax burden (on a ~$10bn buy out) make it an ideal spinoff candidate through an 89%/11% split spinoff, based on its 2014 revenues. However, reports suggest management are also looking to potentially sell the business. “Breaking-up the elevator & air-con maker from the volatile helicopter aircraft unit could unlock value for both United Technologies and Sikorski investors alike, plus deliver new shareholders growth through M&A opportunities, but tax-free”, says chief operating officer at The Edge, Ryan Mendy.
A taxing issue? United Technologies was first pitched to early investors back in 2013, being it a constituent of The Edge’s notorious analysed list of predicted Spinoff candidates. Mendy highlights that the management of United Technologies and its shareholders will face a notable tax liability on disposal. “On two counts, both strategy and valuation, our analysis proves investors would be much better rewarded if…