The Eight Big Spin-Offs To Watch For 2011 (AMR, MT, CVC, FST, FO, LORL, MOT, NOC, HHC, GGP, MSG)
2010 has been a positive year for the markets. IPOs and secondary offerings have been plentiful, debt offerings have been plentiful, and restructurings continue. Many spin-offs have been announced and will occur as we enter 2011. This marks the return of an old trend that will make investors look forward to more deals in 2011 and beyond.
AMR Corp. (NYSE: AMR), ArcelorMittal (NYSE: MT), Cablevision Systems Corporation (NYSE: CVC), Forest Oil Corp. (NYSE: FST), Fortune Brands, Inc. (NYSE: FO), Loral Space & Communications Holdings Ltd. (NASDAQ: LORL), Motorola Inc. (NYSE: MOT), and Northrop Grumman Corp. (NYSE: NOC) are all either planning spin-offs or are considering them. There is also a winner so far in 2010 in The Howard Hughes Corporation (NYSE: HHC) from General Growth Properties (NYSE: GGP). We have provided some basic information and color on each below.
1. AMR Corp. (NYSE: AMR), the parent of American Airlines, has wanted to unload American Eagle for years. What has prevented a deal has been the bad economy and high fuel prices. It was back in the summer that AMR disclosed that it had revived plans that could ultimately lead to a sale, divestiture, or even a spin-off. If the airline sector remains in favor this tranasaction could finally occur in 2011. AMR shares are trading around $7.75 and the 52-week trading range is $5.86 to $10.50. AMR peaked above $35.00 in early 2007. If this will assist in its attempt to regain a former glory, they will likely jettison the regional unit.
2. ArcelorMittal (NYSE: MT), the international steel giant, has recently confirmed that the stainless steel business will be spun off to shareholders. The plan is to distribute shares in the first quarter of 2011 at a ratio of one share of the stainless steel business for every twenty ArcelorMittal shares. With shares around $37.00, its 52-week trading range is $26.28 to $49.41.
3. Cablevision Systems Corporation (NYSE: CVC) has already spun off Madison Square Garden, Inc. (NYSE: MSG) in February 2010. Now the Dolan family is looking at the same possibility for Rainbow Media. In November, the Dolans announced that the board of directors gave authorization to explore a possible spin-off of Rainbow Media. If this occurs, Rainbow Media would become a separate public company with its holdings being national programming, IFC, and Rainbow Network. Cablevision shares are very close to $35.00 and its 52-week trading range is $21.53 to $35.16.