Letting the spinning continue. After a year in which U.S. companies announced 44 spinoffs and completed 20 — including General Electric’s
GE,
+1.47%
spinoff of its healthcare unit, and Intel’s
INTC,
+0.73%
spinoff of Mobileye Global
MBLY,
+0.15%
— analysts at Goldman Sachs expect more transactions in 2023.
“Below-trend economic growth coupled with investor focus on corporate profitability means managements should consider spinoffs as a strategy to lift margins and create shareholder value,” said strategists led by David Kostin in a note to clients. Since 1999, spinoffs outperform their parents by a median 4 percentage points over the following 12 months, the Goldman research finds.
In 2021, these spinoffs outperformed their parent by 3 points, with the best performing being Sylvamo’s
SLVM,
-0.89%
outperformance of International Paper
IP,
+0.34%,
and the worst being Kyndryl’s
KD,
+1.43%
underperformance of IBM
IBM,
+0.29%.
The Goldman team say there are three attributes that are associated with better spinoff returns: lower forward price-to-earnings multiples, lower expected earn …