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One that's on my radar

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September 15, 2010 – Comments (2) | RELATED TICKERS: TYC

I've had Tyco's (TYC) planned spin-off of its Electrical & Metal Products division on my radar for some time.  Today I found out some additional details on the transaction.

This division has been renamed "Allied Holdings US Inc."  The division manufacturers galvanized steel tubes and pipes, armored wire and cable, and other building components.  Not exactly a growth industry right now, but then again buying into this sector now is better than buying at the top of a bubble.  If the price is right it could be interesting.  

Allied Holdings (boy is that a generic name or what...couldn't they come up with anything better than that?) accounts for only 8% of Tyco's total revenue.  Using its 2009 revenue as a baseline, that would amount to $1.36 billion in revenue for the division. 

After reporting a loss in 2009, Allied reported an operating profit of $40 million for the quarter ended June 25 on a solid 22% increase in revenue.

This transaction is scheduled to be completed by the end of March 2011.  

Perhaps something that represents only 8% of the parent company's revenue will be small-enough that many of Tyco's current shareholders won't want to bother with it.  If so, the resulting selling pressure could result in an excellent buying opportunity.  

Tyco Registers to Spin Off Electrical & Metal Products Unit

Deej

2 Comments – Post Your Own

#1) On September 15, 2010 at 6:13 PM, chk999 (99.97) wrote:

Good point about the existing owners selling of the dribs and drabs of stock creating a buying opportunity.

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#2) On September 16, 2010 at 2:49 PM, Bays (30.06) wrote:

Joel Greenblatt is probably keeping his eye on this one as well!  His book is a must read for all spin-off investors... The guy is a master in this category and his fund generated 50% returns for 10 years. 

TMFDeej, keep these blogs coming.  They`re actually bottom-up investing blogs, which is rare around here these days.

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