Pentair Spinning Off Its Electrical Business
Pentair plc announced it would split into two companies just weeks after receiving more than $3 billion in proceeds from the sale of its valves and controls business.
When the acquisition closed, the industrial valves company told investors its future quarterly reports would divide business performance into two departments: water and electrical.
Those two departments will now become independent, publicly traded companies, Pentair said Tuesday.
Its water company, responsible for water and fluid processing systems for residential, commercial and industrial settings, will maintain the Pentair name and ticker symbol (PNR). The group’s three business divisions — Filtration & Process, Flow Technologies and Aquatic & Environmental Systems — generated $2.8 billion in sales in 2016.
Pentair is using a tax-free spinoff plan for the as-yet unnamed electrical company. That name will be announced at a later date, Pentair said.
The electrical company makes protective enclosures, fastening systems and thermal management technologies for electrical equipment. The unit reported $2.1 billion in sales last year.
“We have built two strong, high-performing businesses with the operating acumen and culture to thrive as two independent companies,” Randall Hogan, chairman and CEO of Pentair, said in a statement. “Separating water and electrical to create two pure-play companies is the next logical step in the evolution of Pentair and is consistent with our strategy to continually enhance shareholder value. Both companies will have the focus, talent and flexibility to grow profitably, both organically and through acquisitions.”
Pentair was one of the largest players in the industrial valves space with nearly $6.5 billion in sales in 2015 — the year before it agreed to sell its valves and controls business. Founded in Arden Hills in 1966, the company domiciled in Ireland in 2014. Its current headquarters is in London, but its U.S. operations are centered in Golden Valley.
Hogan told the Star Tribune that the split would not lead to job loses. “To the contrary, we expect this to lead to job growth,” he said. “We will have the need to grow employees, particularly as we grow the companies.”
To date, about 1,800 of Pentair’s 19,000 employees are stationed in Minnesota.
On Tuesday, Pentair shares rose roughly 3 percent, or about $2, over its Monday close of $66.09.
Once the separation is completed in the second quarter of next year, Hogan said he would step down as chairman and chief executive officer.
“We are grateful for Randy’s leadership and are excited that we will continue to benefit from his expertise as he assumes the role of chairman of electrical,” William Monahan, lead director of Pentair, said in a statement. “During his 17 years as CEO, the company has dramatically transformed and delivered more than a six-fold increase in market capitalization.”
With a spin-off in the works, Pentair announced a CEO for each business group.
John Stauch, who is Pentair’s senior vice president and chief financial officer, will become CEO of the water unit. Karl Frykman will be the unit’s chief operating officer as David Jones becomes its chairman.
Beth Wozniak, the current president of Pentair’s electrical business group, will take over the electrical business group as CEO. Wozniak started at Pentair on September 2015 after two-and-a-half decades working at Honeywell.