McDermott International (MDR) announced in December 2009 that intended to do a stock spin-off of its Babcock & Wilcox Power Generation unit. On Tuesday they said that the spin-off is on track.
Their financials also showed that the offshore oil and gas services did very well while power generation lagged, so it would appear that casting off the power generation unit promises to a positive for the parent as well as for the spin-off stock.
The pacing of this process illustrates what is a real positive in spin-offs for me in that it doesn’t happen fast. There is time to read the filings and figure out what you want to do. Being front run by a computer that has made its decision before you can read the title of the press release seems unlikely and with any luck the guys with those fancy computers will go somewhere else.
As for Babcock & Wilcox, this looks like a classic case where they are being given a chance to show what they can do on their own. Let’s just hope the structure of the stock spin-off gives them a fighting chance to succeed and prosper.
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