The Questar board of directors affirmed their plan to spin-off their exploration and production components at their recent meeting.

In a press release after the meeting the company said,   “After the spin-off, Questar would remain an integrated natural gas company comprised of subsidiaries Wexpro Company, Questar Pipeline Company, and Questar Gas Company. Questar’s corporate headquarters would remain in Salt Lake City. QEP Resources, Inc. (formerly Questar Market Resources) would be comprised of subsidiaries Questar Exploration & Production, Questar Gas Management, and Questar Energy Trading. Following the spin, the QEP Resources subsidiaries would be renamed QEP Energy, QEP Field Services, and QEP Marketing, respectively. QEP Resources would be headquartered in Denver, Colorado.”

So, they would end up with two companies, one a steady natural gas company that pays dividends, and the other an exploration and production company that is more directly tied to the price of and demand for the commodity.  It sounds logical, so why are they hedging on whether they will actually complete the transaction or not?

If you want to read it in their own words, look at the transcript of the Q&A. What I took from the long answer is that so many things have to be worked out with so many people that at some point you have to let people know what you are doing or it gets strange.  Reading the whole transcript I concluded that  they want to do it.  They believe it is a good idea. It is a very complicated process.

It was noted that they have done business as one entity for 80 years and having two stand alone units is a new thing to them.  And, the number of interconnections with banks, lines of credit, contractual agreements apparently is mind boggling.

For our purposes it was helpful to hear that they will probably be saying very little if anything publicly between now and an announcement that it will or will not go ahead.  So, we wait and watch.

Tags: natural gas, Questar, stock spin-off, STR

Tyco International Ltd, TYC, has announced the upcoming stock spinoff of its  electrical and metals unit.  The company says that the spinoff will help the parent focus on security, fire systems, and flow control, while the new entity will be better able to do the same with what it does which is making galvanized tubing, electrical conduit, and framing systems.

Enhancing the ability of management to focus their attention is a standard reason for a spin-off and this one looks like it will do that.  Sometimes when companies are taking things apart I find myself wondering what they were thinking when they were putting the pieces together.

One of the reasons cited for this being good for Tyco is less earnings volatility from not being exposed to construction cycles.

From the perspective of being an investor in the spin-off stock this exposure may not be so positive or at least call for an awareness of the cyclical nature of the demand for tubing, conduit, and framing systems.

This seems to be a good example of why the question “are stock spin-offs good?” can’t really be answered beyond saying that they tend to be.  It all depends.   Men tend to be taller than women, but when you stand one woman next to one man there is no certainty that the man will be taller.

Tags: spin-off stock, stock spin-off, TYC, tyco International

For an interesting take on Vishay Intertechnology’s (VSH) stock spin-off of the Vishay Precision group (VPG), check out this May 14, 2010 blog post on the spinoff by a guy who likes to read SEC filings just for pleasure.  He says he has no money and doesn’t buy anything, just likes to try to figure out what’s happening.

It looks to me like he’s done a heck of a job with the VSH – VPG reading.  I hope he does more.

I still don’t know how to figure the Zandman component of this whole deal.  Take a look at the comments on the previous post about this one.   Unless I am reading things wrong, these companies belong to the Zandmans and the rest of us have to decide whether to attach ourselves to their coat tails or not.  Does anyone have anything to add, either about that view or about the people involved?

Tags: stock spin-off, Vishay Intertechnology, VPG, VSH

Vishay Intertechnology’s planned stock spinoff of the Vishay Precision Group is still on for some time in the middle of 2010 according to Dr. Felix Zandman, Executive Chairman of the Board and Chief Technical and Business Development Officer.

Spinoffs are good place to look for watchlist candidates in general, but they are even better when the companies involved are healthy and growing, which appears to be the case with Vishay.  While their reported 1st quarter earnings were positive, they missed estimates on revenue and the stock’s price is off in early going today.  Still, the book-to-bill ratio was reported to be very strong and that coupled with increased manufacturing capacity bodes well for the future.

The stock spin-off provides a reason to look more closely at the parent company and the spin-off.  Perhaps one or both will be put on your watchlist.  Eventual entry depends on confirmation of some sort that fits your trading system, be it fundamental or technical.  In this case, I have adequate reasons for both the parent and the spin-off to go onto my watchlist.  What happens from there, time will tell.

Vishay Intertechnology describes itself as a Fortune 1,000 Company listed on the NYSE (VSH), is one of the world’s largest manufacturers of discrete semiconductors (diodes, rectifiers, transistors, and optoelectronics and selected ICs) and passive electronic components (resistors, capacitors, inductors, sensors, and transducers). These components are used in virtually all types of electronic devices and equipment, in the industrial, computing, automotive, consumer, telecommunications, military, aerospace, and medical markets. Its product innovations, successful acquisition strategy, and ability to provide “one-stop shop” service have made Vishay a global industry leader.

Tags: spin-off stock, stock spin-off, trading plan, Vishay Intertechnology, vishay precision group, VSH