Last Friday, Covidien (COV) announced that its Board Of Directors had given final approval for its long-planned spinoff of Mallinckrodt. Shareholders of record of Covidien as of June 19 will receive one share of Mallinckrodt (MNK) on June 28 for every eight shares of Covidien that they own. The company expects that both Covidien and Mallinckrodt will begin trading on a when-issued basis on June 17. Covidien management expressed the usual platitudes about the prospects of both companies:
“Today’s announcement marks another important milestone toward the completion of the Pharmaceuticals spin-off,” said José E. Almeida, Chairman, President and CEO of Covidien. “As separate companies, Covidien and Mallinckrodt will have greater flexibility to focus on and pursue their respective growth strategies and capital needs, while potentially providing shareholders with greater value over the longer term.”
Covidien should be well-practiced in the art of spinoffs as it, itself, is a spinoff of Tyco (TYC). The IRS has issued a ruling that the distribution of shares will be tax free. More information can be found in Mallinckrodt’s Information Statement, as filed with the SEC.
Disclosure: The author holds no position in any stock mentioned
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So MNK will be the lucky recipient of almost a billion in debt. Any thoughts on a fair value?