ITT to Split into 3 Publicly Traded Companies
January 12, 2011ITT Corp. (ITT) said it plans to split into three publicly traded companies focused on water management, aerospace and defense and industrial products, according to an Jan. 12 online Wall Street Journal article.
The move is intended to decouple the diversified industrial conglomerate’s faster-growing businesses from its defense segment, which faces headwinds in the coming years from lower U.S. spending on military programs, the article said.
“Today marks a new day for ITT,” said chairman and chief executive Steve Loranger during a conference call with analysts Wednesday. “All three companies will be better aligned with their respective customers’ bases.”
In the article, Loranger said the White Plains, N.Y., company has been working on alternatives to its current structure for about six months. Loranger said the company concluded that the tax-free spinoff of three new companies created the greatest value for shareholders.
ITT shares rose 18 percent to $62.31 in recent trading. Through Tuesday, the stock gained 6.1 percent over the past year.
The article said ITT will continue as an industrial-products company that will include the industrial-processes and motion-control businesses, which feature business lines in industrial pumps and valves and automotive components. ITT said it expects to generate $2.1 billion in revenue in 2011.
The article said, the water business, which ITT has been increasing aggressively in recent years, is expected to have annual revenue of $3.6 billion. The company will be focused on the testing and treatment or water and wastewater by municipalities and industrial companies.
ITT’s defense and information-solutions business will become the largest of the three new companies, with annual revenue estimated at $5.8 billion. According to the article, defense has been ITT’s best-performing business segment in recent years as the company supplied equipment for U.S. troops operating in Iraq and Afghanistan. But sales and profit growth slowed significant in 2010 as the U.S. Defense Department began ratcheting down its spending.