Temple-Inland Inc. (NYSE:TIN) shares moved up $7.98, or 14.52%, to $63.06 today after the company announced that it would take Carl Icahn's recommendations and spin-off or sell three of its divisions. We have been
following TIN with great interest since January, when Carl Icahn first proposed a breakup of the company to unlock shareholder value. Since then, shares of the company have risen nearly 30%! Congratulations to all SECInvestor readers who took advantage of this opportunity - we still believe there is a lot of upside after this transaction is completed as the true value of the company's operating segments are individually realized.
According to the company's
8-K filing with the SEC, the company's Board of Directors has approved a transformation plan to unlock shareholder value through the separation of Temple-Inland into three focused, stand-alone, public companies and the sale of its strategic timberland. Upon completion of the transformation plan, Temple-Inland will be a low-cost, highly efficient manufacturing company focused on corrugated packaging and building products. The plan includes:
- Retaining its manufacturing operations – corrugated packaging and building products,
- Spinning off its financial services operation,
- Spinning off its real estate operation, and
- Selling its strategic timberland
The sales process for the company’s strategic timberland is expected to begin immediately, with the majority of proceeds being returned to shareholders. The proposed separations of Financial Services and Real Estate are intended to be tax-free distributions to shareholders. The final terms of these proposed separations and sale have not yet been determined and will be announced at a later date. Completion of the proposed separations is subject to approval of the final terms by Temple-Inland’s Board of Directors; favorable rulings from the Internal Revenue Service, and/or favorable opinions of tax counsel; and the filing and effectiveness of registration statements with the Securities and Exchange Commission with respect to the common stock of each of the spun-off entities, and other approvals. However, the transformation plan is anticipated to be completed by calendar year-end.
Temple-Inland is yet another example of Carl Icahn successfully unlocking value in his investments for the benefit of all shareholders. Clearly there was hidden value in this company that could be unlocked through a strategic separation of its operating segments. Now that the Board of Directors has agreed to unlock this value, shareholders should benefit from not only the 30% rise leading up to today's news, but also the unlocking of value through the Timberland sale and two spin-offs! This makes TIN a stock that is still worth
keeping an eye on!
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