Acuity Brands
(NYSE:AYI) announced that it would be spinning off Acuity Specialty
Products Group Inc. into an independent publicly traded company. The
tax-free distribution to shareholders is expected to take place this
fall with one share of spinco being received for every two shares of
AYI. Shareholders and investors should carefully watch this situation
as it presents a great opportunity to profit!
The spin-off is
expected to generate annual revenues of $600 million with brands
including Zep, Zep Commercial, Enforcer and Selig. The new company also
expects to take on about $70 million in debt and pay out a 16 cent
dividend. Meanwhile, Acuity Brands expects to save approximately $6
million a year through a simplified corporate structure but anticipates
spending around $7 million to make the deal happen.
"We believe
this transaction will meaningfully enhance shareholder value because it
will enable our lighting business and our specialty products business
to pursue their own distinct strategic initiatives and significant
growth opportunities with a sharpened focus," said Chairman, President
and CEO Nagel. "For example, each company will be able to attract and
allocate its own capital and to design equity-based compensation
programs targeted to its own performance. We are excited about the
opportunities for each company to expand its market presence both
through organic growth and through acquisitions."
In the end,
there are many reasons why investors and shareholders should watch this
spin-off. First of all, it is well known that spin-offs tend to
outperform the overall market during their first two years as an
independent company. Secondly, there is clearly a good reason for these
two companies to separate and the terms on which the spin-off is taking
place are more reasonable than most situations. And finally, the parent
company is expecting to save $6 million a year while making itself more
nimble which should help boost its valuation. Overall, AYI is
definitely a stock
worth watching as this fall spin-off approaches!
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