One of my favorite and often overlooked parts of examining spinoffs is the choice of name for the new entity. Generally, this decision requires zero thought as there is a division or some well known product making the choice obvious, such as in the case of Madison Square Garden or Babcock & Wilcox (well…maybe that one isn’t the best example). However, occasionally management needs to flex its creative muscles (by which I mean hire some pricey ‘brand strategy’ consultants) in order to come up with a splashy new name that evokes confidence, pride and numerous other adjectives within a single word. This is how we end up with WPX Energy and QEP Resources. Yikes. Overall, I would say I am unimpressed, but every now and then I am surprised by a unique or clever name such as the recent Howard Hughes Corporation. How random was that one?
Well, you can add ITT’s (ITT) new names for its two upcoming spinoffs to that list, as ITT announced that its water technology company will be renamed Xylem and the defense business will be called ITT Exelis. The core industrials unit will retain the ITT moniker and ticker. Apparently, somebody at ITT really loves the letter ‘X’.
Xylem is expected to trade with the ticker XYL and in case your high school biology is a bit rusty, the xylem is the tissue that transports water in plants. How fitting. Exelis, on the other hand, is completely made up and was chosen because it “is an energetic name…[which] signifies the expeditionary spirit, exceptional foresight and strong commitment to proactively anticipating and adapting solutions to our customers’ most critical problems.” All of that packed into just six letters – amazing. Exelis will trade under the ticker XLS and the company is rumored to be staying put in its current location in McLean.
Form 10′s for the new companies have also been released and a wealth of information, including the aforementioned SEC filings, related company presentations and news releases can be found here. Or you can just click here for Exelis’ Form 10 and here for Xylem’s. The spin appears to be on track for completion by the end of the year and we will keep you updated as more information is released. For our earlier post on ITT, click here and here are some articles from Dealbook and the Deal Journal discussing the move and mourning the loss of the corporate conglomerate.
Readers – any company names that you love or hate?
Disclosure: Author holds no position in any stock mentioned.