[MJN was spun off from BMY in a Feb 2009 IPO and MJN’s share price is up 79% since then. BMY retains an 83% equity stake; from a tax standpoint, BMY benefits from either keeping its stake above 80% (which makes MJN’s dividend payments non-taxable to BMY) or eliminating its stake completely in some kind of tax-free distribution or swap.]
NEW YORK (AP) -- Shares of Mead Johnson Nutrition Co. rose Wednesday after a RBC Capital Markets analyst said Bristol-Myers Squibb Co. may split off its majority stake in Mead Johnson, which could boost the stock price.
Bristol-Myers may be looking for a way to get more money from its 83 percent stake in the Enfamil formula maker, said analyst Edward Aaron. He said it would make sense for the drugmaker to perform a split-off, in which investors can exchange Mead Johnson stock for Bristol-Myers shares.
Wall Street would probably interpret a split-off as a signal that Mead Johnson will be sold, leading to gains for the stock, Aaron said. He said he believes Mead Johnson would be sought after because it has a worldwide marketing presence, good profit margins and a focused portfolio of products. He said that makes it one of the most attractive food companies.
A split-off would save Bristol-Myers about 10 cents per share next year and $215 million in dividend payments, he said.
In afternoon trading, shares of Evansville, Ind.-based Mead Johnson rose $1.32, or 3.2 percent, to $42.98.‹
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