Broeb22 Posted September 13, 2021 Posted September 13, 2021 Based on a discussion from the DISCK thread on the impact of the Reverse Morris Trust overhang on DISCK's share price, I wanted to create a topic about it, and see if other have looked at this too. Do Reverse Morris Trusts typically have similar return profiles to plain vanilla spin-offs? If not, what are the characteristics that make them different? Here are some recent RMT's with completion dates and returns since completion that I found through the magic of Google. Covetrus - Schein RMT with private vet biz (Feb. 2019) -49% + 0% yield LMT and LE (Aug. 2016) 125% + 1.5% dividend yield GE and WAB (Feb. 2019) 24% + a 0.5% dividend yield ETM and CBS Radio (Nov. 2017) -71% + 0% yield
dwy000 Posted September 13, 2021 Posted September 13, 2021 can you frame it a little more? Are you referring to short term movement due to a re-juggling of the shareholder base or are you referring to the long term returns of spinouts in general using this structure?
dwy000 Posted September 13, 2021 Posted September 13, 2021 Verizon spun out their old landlines to Fairpoint a long time ago using RMT. I remember getting shares in Fairpoint and couldn't blow them out fast enough.
BG2008 Posted September 13, 2021 Posted September 13, 2021 1 hour ago, Gregmal said: Wasn't DD one not long ago? Yeah DD merged its nutrition biz with IFF in a RMT. IFF took off pretty quickly after the deal.
Broeb22 Posted September 14, 2021 Author Posted September 14, 2021 6 hours ago, dwy000 said: can you frame it a little more? Are you referring to short term movement due to a re-juggling of the shareholder base or are you referring to the long term returns of spinouts in general using this structure? I think about things in terms of years…so I’m most interested in returns 3-year post-close, but others may have different yardsticks.
Broeb22 Posted September 14, 2021 Author Posted September 14, 2021 5 hours ago, BG2008 said: Yeah DD merged its nutrition biz with IFF in a RMT. IFF took off pretty quickly after the deal. IFF has underperformed the S&P by 30 points since announcement and flat since the close in February…
BG2008 Posted September 14, 2021 Posted September 14, 2021 1 hour ago, Broeb22 said: IFF has underperformed the S&P by 30 points since announcement and flat since the close in February… After deal close Yes. I think IFF was held down because of the RMT transaction in 2020 as some people were likely long DD and short IFF. There was a nice pop in early 2021 when the deal was about to close. I have sold since. But if you swapped DD shares for IFF, that was a nice outcome. I tendered 40% and was pro-rated about half.
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