Ingersoll-Rand Pledges Allegion To The Spin

Months after caving into demands from activist investor Nelson Peltz to break itself up, Ingersoll-Rand (IR) has started releasing details on its commercial & residential security spinoff. The new company will be named Allegion and is expected to trade on the NYSE under the ticker ‘ALLE’. According to the press release, the name was chosen because it represents ‘the collaborative, long-term relationships the company forges with customers,’ and ’embodies the company’s team of experts and their relentless commitment to safeguarding people and property.’ Laying it on thick, but they weren’t done yet.

The company also recently unveiled its new logo which features a lowercase “a” and ‘is created through a deliberate arrangement of panels and openings often seen in architecture blueprints.’ They seem to have included some Sports & Leisure pie pieces from Trivial Pursuit as well. The logo was inspired by ‘the intricate systems of protection in which Allegion’s products and solutions work,’ and ‘captures the spirit of the company and its future in the global safety and security industry.’ As if that wasn’t enough, the design ‘also supports Allegion’s future vision to expand the breadth and depth of its electronic security offerings.’ That is certainly a whole lot of bull packed into a single lower case ‘a’!

In other news, the company filled its top leadership positions by appointing David Petratis as Chairman, President and CEO of Allegion. Mr. Petratis currently holds those titles at a different publicly traded company, Quanex Building Products Corporation (NX). It doesn’t really mean anything, but I always find it interesting when companies choose to bring in someone from the outside versus promoting someone in-house.

Finally, the company also filed its initial Form 10 with the SEC which, as always, is a must-read for the past financial performance and description of the business/industry. A quick scan reveals that the plan is to tack on a ‘substantial’ amount of leverage to Allegion with most of the proceeds being paid back to the parent company. The actual dollar amount has yet to be announced though and this is a situation worth monitoring. The company has been stable during the recent rough economic patch and going forward, it expects mature markets like the US and Europe to grow faster than the recent 1-2% CAGR. If they bump up even slightly to 3-4%, that would certainly have a positive impact on the valuation. The filing also highlights a few of Allegion’s expected competitors and those names can be used as valuation comps and a check on the margin/cost structure.

The spin is expected to be completed by the end of the year and Ingersoll-Rand shareholders will receive 1 share of Allegion for every 3 IR shares owned.

Disclosure: Author holds no position in any stock mentioned.