Ingersoll Rand Sets Allegion Spinoff For December

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It’s almost go time for Ingersoll Rand’s (IR) spinoff of Allegion, its commercial and residential security business. Shareholders will receive one share of Allegion for every 3 shares of IR owned with the distribution taking place on December 1st to shareholders as of the November 22nd record date. The new company will trade on the NYSE under the ticker ‘ALLE’ and a ‘When-Issued’ market is expected to start on or about November 18th. Allegion will also have an investor day presentation on November 18th which should provide additional insight on the new company.

The company previously named David Petratis as its CEO, Chairman and President, but there were only so many hats Mr. Petratis could wear so the company appointed a few other execs:

  • Timothy Eckersley, president of Commercial Americas at Ingersoll Rand, as senior vice president and president of the Americas region
  • Todd Graves, vice president, engineering and technology of Ingersoll Rand Security Technologies, as vice president, engineering and technology
  • Tracy Kemp, vice president, information technology for Ingersoll Rand Security Technologies and Residential Solutions, as vice president and chief information officer
  • Chris Muhlenkamp, vice president, global operations and integrated supply chain at Ingersoll Rand Security Technologies, as vice president, global operations and integrated supply chain
  • William Yu,  president of Security Technologies, Ingersoll Rand, Asia Pacific, as senior vice president and president of the Asia Pacific region

As part of the spinoff process, Allegion raised a bunch of debt including $300m in senior notes and $1 billion of senior secured term loan facilities. The new company will pass those financing proceeds to IR as a special dividend for giving it life (or something like that). The company also will enter in credit facility for its own ‘general corporate purposes’.

This Forbes piece builds up a sum of the parts IR valuation (and post-breakup values), estimating the value of the current company at ~$70 per share, only slightly above its current trading price. The small premium could be because the name has been on a tear, up over ~40%, since the spin announcement late last year. Another interesting point mentioned is that Allegion could be dumped by S&P 500 index investors as the new company will not join its parent in the well known index. If that happens, it could provide an attractive entry point.

Disclosure: Author holds no position in any stock mentioned.

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