Spinoff Odds & Ends: Ferrari leadership, ADT & Google, Varian takeout

It’s time for another edition of Odds & Ends where we share some random articles and pieces that we have been reading…

1. Harvard Business School touts Ferrari’s (RACE) exemplary leadership prior to the coronavirus crisis. Some good lessons in there and kudos to Chairman John Elkann and CEO Louis Camilleri for their strong leadership and foresight. Ferrari is of course a very successful spinoff from Fiat-Chrysler and its success has spawned numerous spinoff ideas/thought pieces in the automotive world. Apparently, the company’s customers are holding up during the crisis and the order book remains strong. Why not?

2. Google (or Alphabet – GOOGL) bought a 6.6% stake in ADT (ADT) for $450m. The home security company will now sell and install Google’s Nest devices in homes. The deal doesn’t appear to be exclusive (ADT will still sell its own branded product in some instances), but Google should see a massive expansion in adoption and thus a huge increase in the at-home data these companies crave. It will be interesting to see if there is any type of backlash against giving Google even more access and insight into one’s personal life. ADT shares surged on the news and at one point had jumped over 100%! It’s come down a bit since then, but the stock is at least close to its 2018 IPO price. The company was previously a 2012 spinoff from Tyco, but was taken private by Apollo in 2016.

3. Siemens Healthineers (SMMNY) is acquiring Varian Medical Systems (VAR) for $16.4B in an all-cash deal. The combo will create a cancer therapy powerhouse…with a terrible name. Healthineers is a 2018 spinoff from Siemens (SIEGY) which remains its controlling shareholder. The deal will be funded by debt and an equity raise and when all is said and done, Siemens is expected to control ~72% of the combined company. Varian is no stranger to the spinoff word itself. The company spun off its imaging business, Varex Imaging (VREX), back in 2016.

According to Siemens CEO & President Joe Kaeser, this move ‘wouldn’t have been possible in the conglomerate structure of the old Siemens AG’. Slimming down can help sometimes and in this case it’s led to a nice win for Varian shareholders.

Please feel free to share anything interesting below!

Disclosure: Author holds no interest in any stock mentioned.


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