Question about my company splitting

[Green Bastard]

I work for an Emerson company, but recently they announced that they are going to "spin off" the network power portion of the company (of which my company is a part of). My question is, what exactly do they mean by spin off? Some people think they will just close the doors if another company doesn't buy us, but as I understand it they will be creating some shares to put on the stock market and that will be how Emerson makes the money for the sale. I figure the network power portion of the company makes Emerson somewhere around 8 billion a year so that is a pretty big chunk to just shut the doors on. I am just trying to gain a better understanding on what is happening, but I don't really understand many of the ins and outs of big business.

[Tractor]

In a lot of cases spin off is done to either let go of a failing portion of a company without actually closing it down right away and attempting to restructure it to become profitable.

 

Or if in your case that part of the company actually makes good profit perhaps they are simply restructuring to become a parent company situation where they own shares of a highly profitable sub company. As you can see most of it has to do with upper management structure and profit/loss at the most basic. There's also tax stuff and corporate bloat to consider.

[Turbs3000]

I would not expect them to close the doors. It's always been common but it feels like it's become more common in recent years. Their are many possible motivating factors, liability, profits, risk, experimentation, Tax brackets.

A columbus example would be wasserstrom, the largest restaurant supply company in the world took their whole IT dept and spun them off as their own company. Which then made wasserstrom it's customer and now they rent server space, consulting, and IT support out to other companies

[Tractor]

That's an excellent example, many companies spin off internal services and become their own customer along with selling services to others.

[Mensan]

Emerson Network Power is an industry leader. There's no way the doors are closing.

[Green Bastard]

Emerson Network Power is an industry leader. There's no way the doors are closing.

 

This is what I keep telling people, we are too big to just shut down. An article I read about a month ago simply stated that Emerson felt we weren't making them enough money so they wanted to sell network power off so they could re-focus on another part of the business. What I thought was odd though is that I heard that out of all the companies they are spinning off, copeland compressors is not one of them, yet network power covers the air conditioning side of the business (specifically what we build where I work).

[mmrmnhrm]

Network Power (I also worked there before joining Expedient) is basically everything having to do with IT and data centers... UPS systems, CRAC units, racks, and the like. The core of the division is Liebert, which was a separate, NYSE listed company up until Emerson bought it out 1984. My guess is that the bean-counters in St. Louis have decided that they're better served by turning them back into either a wholly-owned subsidiary, or (more likely) being majority share-holder of a completely separate corporation. I would expect (if it hasn't been published already) an SEC Form 8-K regarding exactly what and why they're doing this.

 

From my view here at Expedient, Emerson's being short-sighted... NetPwr has always been the smallest, and probably most vulnerable to capex cycles, but when the boom is on, they can't build stuff fast enough, and just like "Nobody ever got fired for buying IBM," there's a reason CRAC units are called "Lieberts" in Canada.