Masco Corporation to Spin-off Installation Business Amid Pressure From Loeb

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Masco Corporation (NYSE:MAS) decided to spin-off its installation and other services business (Services Business) into an independent, publicly-traded company through a tax-free stock distribution to its shareholders.

Spin-off is part of Masco Corporation strategic initiatives

According to the company, the separation of its installation and other services business is part of the strategic initiatives approved by its board of directors. The management of Masco Corporation (NASDAQ:MAS) led by its president and CEO Keith Allman recommended the strategic initiatives.

The board of directors of the company also approved a share repurchase program for an aggregate of 60 million shares of its common stock. Masco Corporation (NASDAQ:MAS) will also reduce its corporate expense and simplify its organizational structure.

The company said its cost-cutting and restructuring measures will result to an estimated charge of roughly $30 million over the next several quarters, and anticipated a company-wide annual savings of $35 million to $40 million.

In a statement Allman said, “Today’s transformative actions reflect our continued commitment to enhance shareholder value through the active management of our portfolio, effective capital allocation, cost control, and organizational focus.”

Allman added that Masco Corporation (NASDAQ:MAS) and the Services Business will have greater flexibility to focus and pursue its respective growth strategies.

Services Business is properly positioned as a separate company

The management of Masco Corporation (NASDAQ:MAS) believed that the Services Business is “now properly positioned to operate as a separate company.”

The Services Business will capitalize on North American new home construction, and it will further expand into commercial and retrofit categories. Allman said, “Masco shareholders stand to benefit from the additional value created by the spin-off.”

Jerry Volas, the current president of Masco Group, will become the CEO of the Services Business.

Allman previously spoke with Third Point and other investors

During a previous conference with investors, Allman stated that he was reviewing the multiple business segments of the company. He also stated that he is considering strategies to boost the value of Masco Corporation (NASDAQ:MAS). He also disclosed that spoke with investors including Daniel Loeb’s Third Point LLC, but did not provide further details about the meeting.

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