After a year and a half to structure the separation, British multinational financial services player Prudential Plc (PRU LN) has timed the demerger of its declining UK & Europe asset management, M&G Plc (MNG LN), ahead of the scheduled Brexit date on Oct 31. While there won’t be any index play due to MNG’s size, short-term negatives give pause for a pre-Spin entry but will monitor the Parent post-Spin due to its high-growth US, Asia and Africa businesses.
10 Oct 2019
In an effort to boost performance and focus on its core Healthcare and Enterprise AI businesses, Nuance Communications, Inc. (NUAN) is prepared to Spinoff its Automotive conversational AI business Cerence, Inc. (CRNC) on October 1. This is another step in a series of divestitures, which have all helped in lowering NUAN's leverage and making it a more nimble entity. Meanwhile, the Spinoff company's technicals indicate a short-term return opportunity, based on dynamics in similar prior break-ups.
25 Sep 2019
The Ensign Group, Inc. (ENSG) will complete the Spinoff of a uniquely positioned senior living and home hospice business (to be called The Pennant Group, Inc. (PNTG)) at the beginning of October, following the same playbook as a previous REIT Spin back in 2014. While PNTG will experience some initial index selling pressure as it leaves the S&P SmallCap 600 Index, it will also be a high-margin, low leverage, and asset-light business prime for a mid-term takeover in a competitive space.
11 Sep 2019
Having only just completed a Spinoff in March (which has returned +30% to date), Naspers Ltd (NPN SJ) will perform another break-up next week with the listing of Prosus NV (PRX NA), the largest consumer internet business in Europe comprised mainly of NPN's 31% stake in Chinese internet giant Tencent. In a unique offering, NPN is allowing investors to elect not to receive Spinoff shares and instead increase their holding in the Parent, but our analysis shows benefits in participating in the Spin.
06 Sep 2019
Back in 2008, Dish Network Corp. (DISH) was Spun off from Parent EchoStar Corp. (SATS). In that transaction, DISH became a standalone cable broadcasting business while SATS continued to operate the satellites used by DISH and other partners, as well as the high-growth Hughes satellite internet business. Now, over a decade later, DISH will regain direct control of its nine satellites in a Reverse Morris Trust, leaving SATS with two leasable satellites and the Hughes segment.
30 Aug 2019
With Eaton Corp’s (ETN) pursuit to Spinoff its Lighting business by the end of this year, analyzing previous deals, we anticipate this transaction to show similar dynamics to other S&P 500 listed break-ups. This gives investors a helpful blueprint of how both the Parent and the SpinCo can react in the initial stages of the Spinoff. Having made certain assumptions ahead of the prospectus release (as debt transfer will be a key factor), we add ETN to our current watchlist.
08 Aug 2019