Investing

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

Flannery did not even commit to maintaining the current dividend for GE, and he has gone as far as saying that there are no sacred cows. That has led some investors to wonder if Baker Hughes, a GE Company (NYSE: BHGE) could be set for a relaunch as a fully independent company, even though it has only one full quarter as a GE entity. GE spun off Synchrony Financial (NYSE: SYF) in its move to exit consumer finance, and it’s harder to find people who love the oil services and equipment business in 2017 than it was a decade ago. Flannery is set to offer a longer-term strategy for GE at a presentation set for November.

Honeywell

Honeywell International Inc. (NYSE: HON) is set to de-conglomerize after many years of having multiple segments. The company was unable to grow via a super-merger, and it is now well over a decade past when General Electric tried to acquire the company. Its $112 billion market cap means that there could be large new entities focused on core operations ahead, targeting a spin-off (or even a sale) of the Home Business and the Transportation Business from the parent. Honeywell shares are close to $146.50 and effectively at all-time highs.

Jack in the Box

Jack in the Box Inc. (NASDAQ: JACK) is really two companies in one, but some regions would never even have heard of the lesser Qdoba brand. This is only a $3 billion company, but even the hint of a breakup here sent shares screaming higher. That being said, with shares at $102.00 it is almost 10% under its recent highs.

Jack in the Box is refranchising its core brand, and Morgan Stanley has been assisting in evaluating options for the Qdoba brand. As of August, this was still under review and no timeline has been set. Of the 2,200 stores in the Jack in the Box empire, about 700 are under the fast-casual Qdoba Mexican Eats brand.

La Quinta

La Quinta Holdings Inc. (NYSE: LQ) is set to split into two operations. This represents a separation of its real estate business into a company named CorePoint Lodging away from the franchise and management businesses that will represent the new La Quinta on a post-spin basis. The filing was made in the summer of 2017 and the operating details already have been set, whereby the transaction was shown to be a taxable spin-off to trade under the CPLG stock ticker.

As a stand-alone company, the post-spin La Quinta total adjusted EBITDA for 2017 was projected to be between $110 million and $115 million, including fee revenue under ongoing franchise and management agreements with CorePoint — and CorePoint Lodging will pay La Quinta a management fee of 5.0% of gross hotel revenues in return for day-to-day management of its hotels and a royalty fee of 5.0% of gross room revenues. This could potentially occur in late 2017 or it could take until 2018.

Novartis

Novartis A.G. (NYSE: NVS) is a big European pharma giant, but the Swiss company is in the process of spinning off its Alcon eye care division. That unit generated roughly $1.5 billion in sales in the third quarter alone, up 7% from last year. There is just one problem as of October and that is that the spin-off now appears to be delayed until 2019. Still, anything can happen when it comes to spin-offs. After a 3% drop to $83.40 per ADS, the stock is still less than 5% under a 52-week high, and the market cap here is almost $200 billion.

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