There are some big and interesting spin-offs coming up within the next couple of months.
Liberty Media (LMCA) is spinning-off Starz, the premium cable channel in mid-January. After the spin-off, Starz is looking to sell itself. In fact, Liberty is already sending feelers out to potential interested parties such as CBS, Fox, Viacom and Univision.
Barron’s had an interesting sum-of-parts valuation of Liberty couple weeks back. It valued Starz at $125, about $15 above the Friday closing price of $110. I personally have not valued each of the businesses, but there are two potential big risks here:
- The majority of Liberty’s valuation is based on Sirius.
- Netflix outbid Starz to carry Disney content after 2016. This could have an effect on Starz valuation going forward. Starz is trying to develop more original content to offset this loss.
There are a lot of believers in Liberty such as Warren Buffett and David Einhorn. However, both those investors were holding Liberty before the recent run up of the stock price.
Pfizer (PFE) is spinning-off its Animal Health Unit, Zoetis. It plans to launch a $4 billion IPO in January or February, valuing the Zoetis at around $20 billion. After the IPO, it plans to distribute the remaining 80% to shareholders.
Check out the latest S1 here.
I am avoiding holding Pfizer because
- I am not a big fan of big pharmaceutical companies. They have to keep coming up with new drugs to maintain and grow revenue.
- Zoetis valuation, even at $20 billion, will be around 10% of Pfizer’s market capitalization.
Although, Zoetis has been growing, it looks expensive from a brief reading of the S1.
News Corp (NWSA) is spinning-off its publishing unit early next year. There has not been much new information on this spin-off except it named Robert Thomson the CEO of the company.
Disclosure: I do not own NWSA, PFE, or LMCA