Spinoff Odds & Ends: Naspers, Alcon, GE Wabtec

Lets close the week with some Odds & Ends. In this week’s edition, we provide some updates on recent and upcoming spinoffs. We also give thanks to a reader for pointing out something we missed – keep it up!

  1. Thanks to reader AH for pointing out that we missed Naspers (NPSNY) spinoff of its Pay-TV business, MultiChoice Group (MCHOY). Naspers is the most valuable company in South Africa, but in reality, the situation is highly reminiscent of the old Yahoo, albeit with less drama. For those that don’t remember, Yahoo was blessed with a large stake in Alibaba which it acquired on the cheap. After failed attempts at a spinoff (and much debate surrounding tax laws), the main Yahoo businesses were acquired leaving its Alibaba (BABA) stake as standalone stub called Altaba (AABA). Napers owns 31% of Chinese giant Tencent (TCEHY) and its ownership also stems from a very early investment that has since paid off handsomely. The company currently trades at a discount to its Tencent stake, implying that the market assigns little to no value to its other operating businesses. The MultiChoice Group spinoff is an attempt to narrow the discount and isolate the value of the larger company’s individual assets. Not everyone thinks the strategy will work though, but management should be commended for trying something! Shareholders as of the Date of Record should have received 1 share of MCHOY for every 5 Naspers shares owned.
  2. While some drug company execs got beat up by Congress last month, Novartis’ (NVS) leadership took their punches from shareholders on the subject at the company’s February 28th AGM. That didn’t stop shareholders from overwhelmingly approving the spinoff of its eye care business, Alcon. As we previously noted, Novartis shareholders and ADR holders will receive 1 share of Alcon for every 5 Novartis shares owned. That means a Novartis shareholder with 100 shares will end up with 20 shares of Alcon. The spin off is expected to be tax free and the new company will trade on the NYSE under the ticker ‘ALC’. Officially, the company puts the timeline as on track for Q2 this year, but the documents seem to point to an early April execution date.
  3. Workers at GE’s (GE) old Erie plant went on strike immediately following the completion of the GE Transportation’s spinoff and subsequent merger with Wabtec (WAB). All of the other plants were able to make a deal, but labor peace eluded Erie. As a quick update, it seems that a short term, 90 day agreement was reached bringing employees back to work while maintaining current wages. The two parties will resume negotiations and hope to use the extension to iron out a long term agreement. Which party feels like a winner? Feel free to make your own judgement.

Disclosure: Author holds no position in any stock mentioned.