Phillips 66 (PSX), Mondelez International Inc (MDLZ) Among The Most Successful Spin Off Companies
What are the most successful spin off companies? When it comes to large corporations, it often seems like some companies have used up all possibilities to increase their value and appreciation in the eyes of shareholders. However, sometimes an ace in the proverbial sleeve could be a spin off of a division or subsidiary of a company. A spin off is the process of separating a division of a large company into a separate business, and throwing all the assets, liabilities, and employees into another company with its own management, and even its own publicly tradable shares. A spin off is one of the best solutions for a company to cut down its expenses, and at the same time to get rid of assets that do not bring any significant value.
In this way, through a spin off, the new company gets its own shareholders, and therefore the parent company is not distracted and can better mind its own business. At the same time, it often happens that both the parent company and the newly-formed company do a lot better separated.
For example, after their merger in 2000, Time Warner Inc (NYSE:TWX) and AOL, Inc. (NYSE:AOL) decided to spin off in 2009, since the merger was not very productive. Aside from AOL, Inc. (NYSE:AOL), Time Warner Cable Inc (NYSE:TWC) and Warner Music Group are two other spin offs from Time Warner Inc (NYSE:TWX).
And even though Time Warner Inc (NYSE:TWX) is a good example that proves that a spin off might turn out into the formation of a successful company, on the market there are some other enterprises that are doing splendidly after being spun off from their parent companies. With this in mind, we have compiled a list of top most successful spin off companies.
No. 5 Huntington Ingalls Industries Inc (NYSE:HII)
Huntington Ingalls Industries Inc (NYSE:HII), Inc. is the 388th company on the Fortune 500, with revenues worth $6.7 billion, and profits of $146 million. Formerly a part of Northrop Grumman Corporation (NYSE:NOC), the shipbuilding company Huntington Ingalls Industries Inc (NYSE:HII) was spun off in 2011, giving the parent company the possibility to focus more on its core areas such as aerospace, electronics and information systems.
No. 4 Hillshire Brands Co (NYSE:HSH)
The fourth position on our list is held by another spin off in the food industry. Hillshire Brands Co (NYSE:HSH), comes from the split up Sara Lee Corporation. Hillshire Brands Co (NYSE:HSH) made Fortune 500 on the 288th position, recording profits $845 million and revenues of $9.3 billion.
No. 3 Marathon Petroleum Corp (NYSE:MPC)
Marathon Petroleum Corp (NYSE:MPC) represents another spin off in the oil & gas industry. Separated from its parent company Marathon Oil Corporation (NYSE:MRO) in 2011, the spin off managed to beat the parent company in both sales and profits. On the Fortune 500, Marathon Petroleum Corp (NYSE:MPC) ranked 33, with sales $76.5 billion, and a profit $3.4 billion, versus $1.6 billion profit of Marathon Oil Corporation (NYSE:MRO).
No. 2 Mondelez International Inc (NASDAQ:MDLZ)
A spin off from Kraft Foods Group Inc (NASDAQ:KRFT), Mondelez International Inc (NASDAQ:MDLZ) currently owns some of the most worldwide popular brands of snack foods, such as: Oreo, Nabisco biscuits; Milka and Cadbury chocolates; Trident gum; Jacobs coffee, among others. With revenues of more than $35 billion, and profits of $1.6 billion, Mondelez International Inc (NASDAQ:MDLZ) ranked 88 on Fortune 88, beating in terms of revenues Kraft Foods Group Inc (NASDAQ:KRFT) with revenue of slightly above $18 billion.
No. 1 Phillips 66 (NYSE:PSX)
In spring of 2012, Phillips 66 (NYSE:PSX) began trading on New York Stock Exchange, after its parent company ConocoPhillips (NYSE:COP) decided to spin off its assets involved in the downstream sector (refining of the crude petroleum oil and purifying and processing of raw natural gas). Phillips 66 (NYSE:PSX) ranked 4th on the Fortune 500 list this year (in comparison, ConocoPhillips (NYSE:COP) ranked 45th), with profits of $4.1 billion and revenues of almost $170 billion.