Lets keep the momentum going and take a look at what is going on in the world of spinoffs:
- Blackhawk Networks (HAWK), a 2014 spinoff from Safeway (which has since been acquired), is being acquired by private equity firms Silver Lake and P2 Capital Partners for $3.5b or $45.25 per share. P2 Capital is already a shareholder with an over 5% stake in the company. Blackhawk is a major player in the gift card and prepaid payment network space. The deal is expected to close in mid-2018, but the company can solicit other bids until February 9th. As of this writing, the stock is trading at the deal price, signalling high confidence in a close, perhaps due to the committed financing. The last HAWK spinoff, Seahawk Drilling, ended up as a literal bust, but this one surely rewarded shareholders who walked away with a greater than 80% return..
- It’s tough to cover European spinoffs, but luckily other sites like Value and Opportunity are really into them as well. V&O examines the recent Swedish spinoff of Arjo AB from Getinje AB (GNGBY). The new company actually started trading on December 11th last year with shareholders of Getinge receiving 1 share of Arjo for every Getinge share owned. It’s worth reading the entire piece for a more complete story, but it looks like a classic good/bad business spinoff with the parent jettisoning its lowest margin and growth med-tech unit. It also tacked on some debt to boot just to make it real ‘nice’. Despite all that, it hasn’t been smooth sailing for either company since the spin with both stocks underperforming the index. Of course, ‘bad’ businesses often end up doing well in the end anyways. The author ultimately passes on the names believing them to be troubled businesses that aren’t currently cheap.
Disclosure: Author holds no position in any stock mentioned.
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