Spinoff Odds & Ends: Thyssenkrupp Changes Plans & Zayo-nara to Zayo Spinoff

We discussed one scrapped spinoff earlier this week – Brunswick’s Life Fitness – but, alas, it wasn’t an isolated incident. In this edition of Odds & Ends we catch you up on the latest in abandoned spin plans:

1. Thyssenkrupp’s Elevator Spinoff

thyssenkrupp (TKAMY) shocked the markets with a stunning strategic about face ‘reset’ last week. Seven months ago the company boldly announced plans to spin off its profitable elevator business into a standalone unit, but now it plans on pursuing a public listing instead. It will use the capital to support its remaining steel and materials businesses.

This wasn’t the only big change announced that day. The company announced a massive restructuring including thousands of job cuts and, oh yeah, it also abandoned a planned steel making JV with Tata due to feared antitrust failures. Is that all?

The company has been in disarray over the past year and in additional to a slumping stock price, the company also lost its CEO and Chairman last summer. The company’s largest shareholder, the Krupp Foundation, had been supportive of the abandoned moves, but other major shareholders, including activists Elliott and Cevian Capital were more dubious of their prospects. It seems they were able to sway the new management team.

This should be an interesting situation to watch and we will keep everyone updated on the Elevator company listing plans.

2. Zayo Group’s Enterprise Spinoff

Last November, Zayo Group Holdings (ZAYO) announced plans to break up into an enterprise company and a fiber focused infrastructure company. The move raised some eyebrows and eventually activist Starboard Value took a 4% stake in the company while publicly questioning management’s strategy. This led to a ‘strategic review’ and ultimately, the recent announcement that the company would be taken private by private equity firm Digital Colony Partners and the EQT Infrastructure IV Fund. Shareholders will receive $35 per share in cash valuing the company at $8.2b or $14.3b including the planned assumption of debt. Bye bye spin.

Kudos to YetAnotherValueBlog which nailed this idea back in January. In that writeup, the author was

a) pretty ‘meh’ on the spinoff plan and

b) predicted it would end in a sale in the low-mid $30 range to a private equity buyer

Can you say nailed it?

The deal is expected to close in early 2020.

Disclosure: Author holds no position in any stock mentioned.