Spinoffs have been relatively popular recently and you know how ‘fads’ go. Once a trend begins, people (in this case companies) try to one up another by going bigger. Better. Bolder. One spinoff isn’t enough anymore so Fortune Brands (FO), ITT (ITT) and even Carrefour (CRERY) went for two. Please give a hearty welcome to the newest member of the two-spin club, IDT (IDT), which announced it will spin off Innovative Communications Technologies Inc. (ICTI). The new company will own a portfolio of communications related patents (including VoIP) and any related licensing businesses. Not surprisingly, IDT is heavily involved in this area and the company’s Net2Phone subsidiary was one of the early players in VoIP. Our earlier post on IDT’s other spinoff, Genie Energy, can be found here.
According to CEO Howard Jonas, the new company “will be optimally positioned to license these patents and enforce its intellectual property rights. This spin-off maximizes the potential to create substantial value for our shareholders from this IP over the long term.” I guess that means we should expect some lawsuits in the near future. The reasoning is definitely interesting and valuing the business could prove tricky. IDT shareholders will receive one ICTI share for every 5 IDT shares owned which means that Mr. Jonas will remain the dominant shareholder. The new company will trade OTC. A preliminary Form 10 (a must read) can be found here.
We will keep you updated as more information is released.
Disclosure: Author holds no position in any stock mentioned.