Charlotte-based SPX said Wednesday that it plans to split into two companies, spinning off its flow products division as a new, independent standalone.
The flow company will have $3 billion worth of revenues, SPX said, making and selling equipment such as pumps, valves and filtration systems. It will be led by current SPX chairman and chief executive Chris Kearney, who will hold the same roles at the new company.
The remaining part of SPX will continue as a separate infrastructure company, with $2 billion worth of revenue. The company will make and sell products such as power transformers, boilers and communication systems. Michael Mancuso, an SPX board member, will be chairman of the new infrastructure company’s board. Gene Lowe, president of SPX’s thermal equipment unit, will be CEO of the infrastructure company.
SPX employs about 350 in Charlotte, where the company is headquartered in a Ballantyne office building. SPX moved into its headquarters facility in 2013. Spokeswoman Jennifer Epstein said SPX plans for both companies to remain in Ballantyne, with their headquarters in the current building.
“We believe the spin-off will provide both companies greater flexibility to focus on and pursue their respective growth strategies, enabling them to create significant value for shareholders, customers and employees,” said Kearney, in a statement. SPX estimated the transaction, which will be tax-free for shareholders, will incur one-time costs of $60 million to $80 million.
SPX shareholders will initially receive 100 percent of the shares in the new flow company. The company anticipates closing the deal within a year. Executives said the transaction was structured to spin off the larger part of the business, rather than the smaller part, which would be more typical, because it was easier to do for tax and expense reasons.
Corporate spinoffs have been popular of late. Ingersoll Rand, which has its North American headquarters in Davidson, spun off its residential and commercial security businesses into a new firm called Allegion last year. And earlier this month, Hewlett-Packard announced plans to split its printer business from its software and other hardware business.
The market’s reaction to SPX’s plan was tepid. Shares of SPX closed up 1 percent Wednesday, at $96.14 a share.
SPX also reported its third-quarter earnings Wednesday. The company’s revenues rose 1 percent, to $1.16 billion. Profits were down 8 percent, however, to $63.5 million.
The company also broke down sales by its major segments, which will make up the independent companies going forward. SPX said revenue at its flow products division fell 2 percent, to $639 million, mostly due to lower sales of power and energy pumps. Revenue at the thermal equipment and industrial segments rose 5 percent, to $520 million.