Big Spinoff

ITT Corp. today announced a plan to separate into three independent publicly traded companies -- one defense-related, one water-related and one engineering and industrial firm.

According to a company statement:

Under the plan, ITT would execute tax-free spinoffs to shareholders of its water-related businesses and its Defense & Information Solutions segment.  Following completion of the transaction, ITT will continue to trade on the New York Stock Exchange as an industrial company that supplies highly engineered solutions in the aerospace, transportation, energy and industrial markets. Under the plan, ITT shareholders will own shares in all three corporations following the completion of the transaction.

ITT senior management and its board of directors believe that these three businesses are well-positioned to create significant value for shareholders as standalone companies.  ITT expects to finalize and execute the plan before the end of the year.

"For nearly a century, ITT has been known for transformative strategies that create value for customers and shareowners," said Steve Loranger, chairman, president and chief executive officer of ITT.  "In recent years, we have nurtured and grown our unique portfolio of businesses, which are now poised to emerge as three strong and focused standalone companies, with leading products and market positions, highly skilled employees and tremendous value-generating potential for shareowners.  In today's business environment, we believe this strategy is the best approach to unlock this value and position the three businesses to grow and serve customers as focused global companies.  Each new company will be more nimble and able to build stronger, more intimate customer relationships to accelerate mutual success."

As for the defense-related spinoff:

Following completion of the spinoff, the existing Defense & Information Solutions segment will be renamed and rebranded as a new standalone company that is an industry-leading provider of innovative technologies and operational services to meet the enduring requirements of the global military, government and commercial customers. The company’s products and services will include premier technologies such as next generation night vision, integrated electronic warfare, networked communications, force protection, radar, global intelligence, surveillance and reconnaissance systems, composite structures, space-based satellite imaging, weather and climate monitoring, and navigation and imaging systems, as well as maintenance, engineering and professional services. The business will continue to focus on growth beyond the core Department of Defense customer, with nearly 30 percent of revenues already coming from adjacent markets, such as air traffic management, information and cyber security as well as strong international growth prospects.

Pro forma 2011 revenue for the new defense and information solutions business is estimated at $5.8 billion.

And on who will lead what:

Effective upon the completion of the transaction, the new ITT Corporation will be led by ITT’s current Chief Financial Officer, Denise Ramos, who will serve as its future chief executive officer.  Its chairman of the board will be Frank MacInnis, currently a director of ITT Corporation and the chairman and former chief executive officer of EMCOR Group, Inc.  The water technology businesses will become a new company to be led by Gretchen McClain, currently president of ITT Fluid and Motion Control, who will serve as its future chief executive officer.  Its executive chairman of the board will be Steve Loranger, currently chairman, president and chief executive officer of ITT Corporation.  The Defense & Information Solutions business will become a new company to be led by David Melcher, currently president of ITT Defense & Information Solutions, serving as its future chief executive officer. Its chairman of the board will be Ralph Hake, currently a director of ITT Corporation and previously the chairman and chief executive officer of Maytag Corporation.