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DewDiligence

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DewDiligence

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Re: DewDiligence post# 3135

Friday, 10/28/2011 6:52:53 PM

Friday, October 28, 2011 6:52:53 PM

Post# of 30495
Re: ITT split-up arithmetic

Xylem (XYL) and Exelis (XLS), the two companies to be spun off from ITT, are already trading on a when-issued basis. Here are today’s closing prices:

XYL.wi 25.82
XLS.wi 10.92

The sum of these two prices is 36.74.

Since ITT itself closed at 44.99, it follows that investors are currently valuing the residual industrial component of the parent company at (44.99-36.74) = $8.25/sh.

Note: When the spun off companies begin trading and ITT begins trading ex-distribution on 11/1/11, ITT wil undergo a 1:2 reverse split.

“The efficient-market hypothesis may be
the foremost piece of B.S. ever promulgated
in any area of human knowledge!”

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