Pentair’s board of directors recently approved a plan to separate its water and electrical businesses into two independent, publicly traded companies.
According to a company press release, the proposed transaction will see the ‘water’ company, which generated approximately $2.8 billion in sales last year, focus on smart, sustainable water and fluid processing applications. It designs, manufacturers, and delivers innovative solutions to residential, commercial, and industrial customers. Strategic business groups include filtration and process, flow technologies, and aquatic and environmental systems. The company will retain the Pentair name and logo.
The ‘electrical’ company, which generated approximately $2.1 billion in sales in 2016, will focus on improving utilization, lowering costs, and maximizing customer uptime. Its industrial enclosures, fastening systems, and thermal management technologies help protect sensitive equipment, buildings, critical processes, and help keep people safe. The company will be named later.
The separation is expected to occur through a tax-free spin-off of the electrical business by Pentair to its shareholders.
“We have built two strong, high-performing businesses with the operating acumen and culture to thrive as two independent companies,” said Pentair’s chairman and CEO Randall Hogan. “Separating water and electrical to create two pure-play companies is the next logical step in the company’s evolution and is consistent with our strategy to continually enhance shareholder value.
“Each company will have the focus, talent, and flexibility to grow profitably both organically and through acquisitions.”
The separation will see John Stauch, senior vice-president and CFO of Pentair, become water’s CEO, and Karl Frykman, the current president of Pentair’s water segment, become water’s COO. Existing board member David Jones will become chairman of water. Beth Wozniak, the current president of Pentair’s electrical segment, will become CEO of electrical, while Hogan will retire as the company’s chairman and CEO and will serve as chairman of electrical.
“We are grateful for Randy’s leadership and are excited that we will continue to benefit from his expertise as he assumes his new role,” said Pentair’s lead director, William Monahan. “During his 17 years as CEO, the company has dramatically transformed and delivered more than a six-fold increase in market capitalization.”
Pentair expects to complete the separation in the second quarter 2018, subject to satisfaction of customary conditions, including final approval from the company’s board of directors, receipt of tax opinions, and rulings and effectiveness of appropriate filings with the U.S. Securities and Exchange Commission.
