Altria Group, Inc. (NYSE: MO) said in a statement that it plans on to spin-off Philip Morris International, though final approval would depend on a January 30th board meeting as well as a favorable ruling from the IRS on tax consequences of any such move.

The spin-off is a logical, if not necessary, move as it would separate the  fast growing international cigarette division, which accounts for two-thirds of Altria profit, from the declining consumption and legal liability of the U.S. cigarette market.

Altria is currently the world's largest cigarette company but the international division has been a particular bright spot with dominant market share in France, Germany, Italy and Spain. Cigarette sales by volume increased 3.3% last quarter compared to a year ago for the international division, while declining by the same amount for the domestic unit.

Earlier this year, Altria spun-off the world's second biggest food company Kraft Foods, Inc. (NYSE: KFT), though for much different reasons - its shrinking profits were hurting Altria's other divisions.

After the proposed spin-off, current Altria Chairman and CEO Louis Camilleri would assume that position at Philip Morris International while current Philip Morris USA head Michael Symanczyk would become the new Chairman and CEO of Altria.

Regardless if the board approves any proposed spin-off, the fact that the company is recognizing the increasing opportunity in the international cigarette market definitely makes MO a stock worth watching in the coming months!

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Tyco Electronics (NYSE:TEL) is finally beginning to catch the attention of value investors after its rough start as a public company. The Tyco spinoff is trading well off of its initial offering price, continues to be valued below its peers, and has only one analyst recommending a buy. So, why is Tyco Electronics a stock worth watching? Let's take a look...

Tyco Electronics shares are currently trading around 10% below its initial offering at around $36.50. The stock is trading at around 16x forward earnings compared to an industry average 21x, which means it is trading at a discount to its peers. This is despite a healthy cash flow with a 6% free cash flow yield. So fundamentally, this company is relatively healthy and trading at a discount to its peers.

Tyco Electronics has also seen some significant insider buying this month. Thomas Lynch purchased almost $680,000 worth of stock on August 13th while two other insiders purchased an addition $110,000 worth of stock shortly afterwards. Meanwhile the company has seen no insider selling, which indicates that insiders are confident in future prospects.

Finally, Tyco Electronics is unique in that it is a spinoff company, which have historically outperformed the overall stock market. A Thompson Financial study of spinoffs dating back to 1996 found that the average spinoff company fell during the first month but recovered to an 8% gain after six months and a 12% gain after twelve months. These returns are far in excess of average stocks!

This tendency is attributed to the fact that parent company shareholders often do not want shares in the new company and sell their shares. This unjustified selling pressure pushes down share prices despite decent fundamentals, which creates buying opportunities in the early months after a spinoff. Tyco Electronics is no different; however, the current market conditions have pushed this move even lower despite decent fundamentals. And this has created a great value play that investors are just now starting to notice!

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United Online (NDAQ:UNTD) shares moved up $1.06, or 7.95%, to $14.40 in early trading today after the company filed an S-1 with the SEC yesterday indicating that it would IPO its Classmates.com holdings and raise $125 million. Many investors are speculating that this IPO would prove to be a boom for the struggling dial-up internet provider.

Classmates.com is a social networking website that connections alumni with eachother. The segment reported revenues of $42.4 million in the quarter ending in March on a loss of $250,000. And the business is only continuing to grow with revenues in 2006 topping $139 million. Revenues this year are expected to come in at around $200 million or more.

Given the valuations being thrown around by Facebook.com and others in the social networking space it would not be unreasonable to put a 5x revenues valuation on the company. Assuming revenues of around $200 million this year, the company could be worth as much as $1 billion. Obviously this is great news for United Online shareholders as their entire company is worth just under $1 billion itself.

Whether or not this IPO sees a tremendous amount of success remains to be seen; however, given the strength of the social networking space and the fact that this company has a leading market position makes UNTD a stock worth watching!

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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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Tyco International (NYSE:TYC) gained necessary government approvals yesterday for the spin-off of its healthcare and electronics segments to shareholders. Shares in the manufacturing and service company rose to set a new 52-week high on the news as shareholders look forward to the divesture. Shareholders on record June 18th will be eligble to receive shares in the new companies that are expected to begin trading as early as July 2nd under the symbols COV and TEL.

Many shareholders have been looking forward this spin-off as the two business segments have long been considered undervalued. The spin-off will unlock this value by freeing the segments of an overburdening corporate structure. Many analysts estimate Tyco stock as trading at less than half of its eventual value that will be realized once the three businesses are operated independently. Others peg the value just shy of $40 per share. Regardless, most analysts agree that this spin-off is a long overdue effort to unlock value in Tyco's diversified businesses.

So, what does this mean for investors today? Well, many analysts peg the intrinsic value of Tyco post-breakup at a collective $40 per share. This represents a premium of more than 15% over today's close. We also know that spin-offs in general tend to outperform the overall market due to factors related to the structure of the deals. Often times, existing shareholders that receive shares in the new company will immediately sell them since they never intended on holding them. This causes unjustified selling pressure on the new spin-off companies, which can translate to opportunity for enterprising investors. Combined, these factors make TYC a stock worth watching!

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