Spinoff Odds & Ends: EBay,Ceconomy,Brenda Barnes

1. The WSJ notes that since the spinoff of PayPal (PYPL), EBay’s (EBAY) post-earnings stock price volatility has increased dramatically. Prior to last week’s announcement, the name had moved double digit percentages in four of the previous five announcements – that is some serious movement. As possible reasons, the article points to the company’s transformation into a traditional e-commerce player (vs. auction business) and also noted the increased competition in its new space. While not double digits, the stock did pop over 6% after announcing solid earnings last Wednesday. Perhaps analysts are starting to get a better feel for the new company. Bloomberg’s Gadfly suggests a healthy dose of M&A for the company in order to fuel growth. If it opts for that strategy, maybe we will see some huge non earnings related volatility as well.
2. Value and Opportunity thinks Metro AGs (MTTRY) proposed Ceconomy spinoff might be interesting…at least from a potential mispricing perspective. While the company isn’t all that exciting, the situation reminds him of prior ‘ugly duck’ spinoffs such as Osram and Uniper which ended up getting overly punished out of the gate by the market. Both companies ended up rewarding shareholders pretty quickly though. The entire piece is worth a read and  while I don’t fully agree with his memo that ‘Succesful Spin-off investing has nothing to do with finding “great companies” but potential mispricing’, the entire piece is worth a read and includes a run-down of the transaction and a quick valuation for the electronic retailer business. Extra bonus kudos to the author for highlighting the ‘idiotic’ name of the spinco. It’s not Mondelez, but it’s up there.
3. In Memoriam: Brenda Barnes, former CEO of Sara Lee died earlier this month. Ms. Barnes famously resigned as President and CEO of Pepsi North America in 1997 in order to spend more time with her three young children. Seven years later she joined Sara Lee and presided over the spinoff of Hanes Brands(HBI). In 2010 she suffered a major stroke which ended her career. As a result, Sara Lee spun off DE Master Blenders 1753 and renamed itself Hillshire Brands. Her courageous struggle to recover from her stroke was an inspiration to us all.

Disclosure: Author holds no position in any stock mentioned.