Investing

13 Spin-Offs Set to Radically Change Top Companies in 2017 and 2018

Delphi Automotive

Delphi Automotive PLC (NYSE: DLPH) is a $26 billion outfit and its shares have recovered handily from the dog years. Now Delphi is set to split up its Powertrain Systems business and the old Delphi. The company has entered into credit agreements to move closer to that spin-off. The old Delphi will be named Aptiv and remain under the existing CEO, and certain approvals are up for vote in November. The spinco will hold the efforts under the move toward autonomous and connected vehicles.

In September the stock had run over 30% since the plans to break the company up were announced in May. Also, Delphi just announced a $450 million acquisition of a self-driving car startup named NuTonomy for $450 million.

DowDupont

DowDupont Inc. (NYSE: DWDP) is now the merged Dow Chemical and DuPont, and it is about to get a serious makeover. In order to secure approvals to the merger, the two chemical giants effectively had to set the stage to break up into three areas of operations. The merger closed late in the summer, and the shares just hit a post-merger high above $72.

This three-way spin-off is not going to be completed until well into 2018, and there is always a possibility that shareholders might not see it occur all at once and might see more changes to the deal on top of those that already have been seen. DowDuPont has a $167 billion market cap now. As of last look, DowDuPont’s three future businesses are as follows: plastics and materials under the Dow brand, an agricultural chemicals and seeds unit and then a specialized products company.

Eli Lilly

Eli Lilly and Co. (NYSE: LLY) has continued to talk up the ability to spin off its Elanco animal health business. The animal health unit contributed close to 15% of sales in 2016, but more focused competition has come into play and investors have signaled a welcome to this effort. Its third-quarter unit sales were $740 million, and that was up 5% from a year ago’s third quarter. The Dow Jones news service has used a JPMorgan figure that this could fetch $14 billion to $16 billion in an outright sale.

Eli Lilly’s shares were last seen close to $86, about 4% shy of a 52-week high, and with a $90 billion market value. This is still a potential deal that may not have a final destination even known until 2018.

FMC

FMC Corp. (NYSE: FMC) was a boring chemicals company that most investors might have ignored for years. But its outside view as a key lithium player has driven its shares up and up, now that investors have looked beyond just Tesla, as China and the United Kingdom have joined in the effort to ultimately end using combustion engines. Energy storage is also just getting going as a real business in the move for cleaner energy.

FMC shares were last seen closer to $94.20, down just 1% from an all-time high. Its market cap is $12.6 billion. The company has been prepping the markets for a spin-off of the lithium operations since earl in 2018, and the spin-off is now looking out well into 2018.

GE

General Electric Co. (NYSE: GE) has been so unloved and such an underperformer for so long that Jeff Immelt took early retirement. Now it has demonstrated a kitchen-sink earnings bucket in which the company looks in disarray. John Flannery is now firmly set to be in charge, and Flannery has committed to somewhere around $20 billion worth of carve-outs from capital-intensive business operations under GE that don’t help toward the growth of the company.

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