Resideo Technologies Inc (“Resideo” or “REZI”) will spin off its distribution arm, ADI Global Distribution (“ADI”), via a tax-exempt distribution of 1 ADI share for every 2 REZI shares on August 3, 2026 at 5:00 p.m. ET (with fractional shares being paid out in cash). Resideo will continue to trade on the NYSE under ticker “REZI” while ADI will start trading on the NYSE under ticker “ADIG”.

All told, we fail to see a compelling rationale for the transaction since we view the businesses as being synergistic with each other. This, coupled with a sluggish housing industry (e.g., elevated interest rates, weak consumer sentiment, & volatile geopolitics), we assign a SELL rating to pre-spin shares of REZI and a price target of $31.68, which is based on 8.2x our 2027E EBITDA of ~$950 million ($19.70 for P&S/RemainCo based on 8.1x our 2027E EBITDA of ~$627 million and $23.97 for ADI Global Distribution/SpinCo based on 8.4x our 2027E EBITDA of ~$324 million). Within this framework, we assume the Fed keeps rates constant for the remainder of 2026 and Resideo’s 2030 financial roadmap remains intact. Key risks to our thesis include: 1) earlier-than-expected rate cuts; 2) unexpected strengthening of the job market; 3) regulatory relief; 4) significant ‘beat-and-raise’ execution; and 5) major strategic pivots.

To be clear, we think both businesses are well-run (continuing on Honeywell’s legacy and culture) and are structurally fine but that the market is already pricing in the standard benefits of a spin (e.g., increased operating efficiency & differing growth profiles/valuation multiples) as evidenced by the stock’s reaction post-investor days even though we do see those attributes necessarily applying in REZI’s particular case. Further, we also think the market seems to be valuing REZI based off pure-play competitors that are more established in their particular field, which we think is overly generous.

In terms of valuation, we assume that each standalones’ 2030 financial roadmap unfolds as projected but apply a discounted valuation multiple relative to peers. For P&S, we discount the blended average multiple by 8x (1x for utilizing pure-play peers which deserve higher multiples, 1x for near-term macro headwinds, 1x for residential exposure, 1x for risk-off sentiment coupled with memory chips shortage even though P&S products have low demand for it, 1x for operating in ‘melting ice cube’ industry, 1x for spin without strong rationale, 1x for elevated levered balance sheet, and 1x for the lack of a dividend versus peers averaging 1.4%). For ADI, we utilize the average excluding the extremes/outliers and discount it by 6x (1x for near-term macro headwinds with high Americas exposure, 1x for volatile energy costs potentially squeezing margins further, 1x for elevated risk of international supply chain disruption amid frequent geopolitical strife, 1x for spin without strong rationale, 1x for somewhat poor initial credit rating coupled with lack of track record as an individual company, and 1x for lack of a dividend versus peers averaging 1.5%). For context, REZI has been trading at an average NTM EV/EBITDA multiple of 7.3x and 6.5x over 3- and 5-years, respectively, as such despite the significant discount we think it is fair and may even be leaning towards the conservative side.

Considering the low double digit downside implied by our fair value estimate (see Exhibit 12), we initiate pre-spin coverage with a SELL rating.

Amentum Holdings, Inc. (NYSE: AMTM), which was created in its current form via a tax-free Reverse Morris Trust (RMT) transaction in September 2024, has, since its debut, seen its shares decline ~37% (underperforming the S&P 500, of which it is a member, by ~67%) amid broader concerns for so-called government services contactors amid spending uncertainty and a comparatively above-average leverage profile (i.e., ~4.0x moving to <3x by the end of F2026E, <2.5x in F2027E & <2.0x in F2028E). That said, against the backdrop of our contention that AMTM is better positioned than other sector players given its focus on support functions in high-priority areas, such as defense, intelligence, cyber, energy & space, we think that from a valuation perspective at ~7.0x F2027E EV/EBITDA and F2027E EPS and a free cash flow yield (FCF) of ~12.5% shares trade at a unwarranted discount to peers (at 9.0x, 11.5x EV/EBITDA & EPS, respectively) and offer an attractive entry point. To that end, we contend AMTM’s 2H F2026E-F2027E FCF generation will fuel an aggressive de-leveraging effort that, in & of itself, supports upside (as well as increasing optionality) even while modeling un-heroic/stable underlying top-line growth (i.e., 2.5%-3.0%) & marginal incremental margin improvement (i.e., ~50 bps vs. F2025 given cost-plus/time-and-materials arrangements comprise ~75% of sales) through F2027E. All told, based on a blended multiple of ~8.5x F2027E EV/EBITDA, we derive a fair value estimate of $30 per share (with bull & bear cases of $34.50 per share and $22.50 per share, respectively).

Catalysts, among others, include new contract wins, particularly in the nuclear & missile defense arenas, improving margins, leverage reductions leading to opportunities for accretive cash deployments, while Risks include changes in government spending priorities/interruptions in funding, changes in regulatory parameters, contract losses, the unwinding of private equity ownership, leverage, cost overruns on fixed price contracts, potential environmental liabilities, technological disruption, cyber security lapses, currency/commodity fluctuations, a recession and/or wider geopolitical instability/pandemics, among others.

Please note:  This email was initially scheduled for June 15 but was delayed due to a technical issue that has since been resolved.

S&P Global Inc (“S&P” or “SPGI”) will spin off its Mobility division through a tax-exempt demerger into an independently listed company, Mobility Global (expected to trade on NYSE under ticker “MBGL”) on July 1, 2026. Shareholders of SPGI will receive MBGL shares on a 1:1 pro rata basis (with fractional shares being paid out in cash).

Beyond the standard rationale for a spinoff (i.e., increased organizational efficiency, differing growth profiles, & the removal of a conglomerate discount), we think this represents a move to sharpen focus on the development of use-case specific AI/analytical tools. One of SPGI’s competitive advantages is the massive dataset it possesses; we note that SPGI has AI offerings, but more work is needed to fully leverage the data and unlock substantial value for shareholders. In a sense, we think this is SPGI going on the offense to not only stay at the forefront of the industry, but also capture market share and fend off threats from potential new entrants.

We assign a NEUTRAL rating to pre-spin shares of SPGI as near-term macro headwinds (e.g., potential rate hikes, weakening consumer sentiment, geopolitical strife, & massive IPOs) likely trounce any fundamental benefits from the transaction. More precisely, our view is that there is likely to be continued multiple contraction across the sector as opposed to a material earnings decline for S&P Global. Both standalone entities will be leaders in their respective fields and are well positioned to, on a relative basis, outperform their respective markets. Our sum of the parts analysis, based on a blended multiple of ~17.0x, yields a pre-spin sum of the parts fair value estimate of ~$134 billion or ~$453 per share (based on a diluted share count of ~296 million), consisting of ~$437 per share for SPGI RemainCo and ~$16 per share for Mobility Global.

All told, we think there may be an opportunity to potentially capture trading gains shortly post spin in Mobility Global as we expect a quick rotation out of Mobility Global, which will undoubtedly be removed from the S&P 500 Index, in favor of RemainCo as we discern the majority of existing SPGI investors will look to retain the Ratings/Indices business. Nevertheless, the fundamentals behind Mobility are sound and may not warrant the potential share price damage we envision as the shareholder base rotates. Functionally, this may ultimately present a potential pairs trade of fading RemainCo and longing SpinCo, at some point (but time will tell, and we will update investors at the appropriate time).

Recall, in late October 2025 Honeywell International Inc. (NASDAQ: HON) completed the tax-free spin-off of Solstice Advanced Materials, with the transaction having been initially announced October 2024. In November 2024, roughly a month after the SOLS spin-off announcement, activist-investor Elliott Management issued a public letter to HON’s Board indicating it had accumulated a sizeable stake and suggested, among other things, the further separation of HON’s Aerospace & Automation businesses. In that context, on February 6, 2025, HON announced its intention to separate the Automation and Aerospace businesses in a tax-free spin-off transaction that is scheduled to be completed on June 29, 2026. RemainCo, which will be branded Honeywell Technologies, will consist of the Automation business, and maintain its current listing while SpinCo will be comprised of the Aerospace business, which will become Honeywell Aerospace & trade under the NASDAQ ticker HONA. Shareholders of record will receive one share of HONA for every two shares owned of HON (with the post-spin parent intending to effect a 1-for-2 reverse stock split concurrent with the spin’s completion).

For a degree of broader perspective, Honeywell has been actively engaged in a portfolio transformation in recent years focusing on what management views as three “compelling megatrends,” specifically automation, aviation and the global energy transition, which precipitated the spin-offs of its home business, Residio, and its turbocharger business, Garrett Motion, in 2018 as well as the more recent Solstice transaction. Concurrently, HON has also been active on both the acquisition (e.g., Johnson Matthey’s Catalyst Technologies business) & divestiture fronts (e.g., PSS & WWS). The soon-to-be parent company also maintains a minority position in Quantinuum (NASDAQ: QNT), a quantum computing firm in which it has a ~47% stake, that completed an IPO at a ~$15.5 billion valuation in early-June 2026.

On the indexation front, Honeywell, is a member of the Dow Jones Industrial Average as well the S&P 500 Index; that said, while no formal announcement has been made regarding what (if any) index HONA will be included post-spin, based on our estimates, it will likely have an initial market capitalization that well exceeds those of Qnity (spun out of DD), Solstice, and FedEx Freight, which were all ultimately included in the S&P 500, upon their respective debuts. In that context, it seems reasonable to suggest that potential index related dislocations (i.e., “forced selling”) would be muted in the event of HONA’s addition to one or more of the major indexes, particularly considering the concentration of ownership among the large passive funds, namely Vanguard (~9.99%), Blackrock (~7.7%%) & State Street (~5%), which as the top-3 shareholders collectively control ~23% of the company (or ~144 million shares, representing ~35 days of trading at the daily average). Further, in our anecdotal opinion, in the absence of portfolio mandated selling requirements many investors may seek to maintain a level of exposure to the A&D sector (although we acknowledge the potential for some shareholder rotation).

All told, we assign a NEUTRAL rating to pre-spin shares of HON as we think the recent bounce back in share price following an upbeat Automation investor day (on June 11th) in the wake of a somewhat underwhelming investor presentation at the Aerospace event (i.e., front-loaded vs. back-end loaded) has, in our view, left the stock in somewhat of a “no-man’s” land where investors must either bake in a higher degree of future growth/execution or stretch the multiples. To that end, while it could be that within the context of the current market backdrop a nearly double-digit return could be attractive to some investors for a large, high-quality, dividend paying industrial concern, we prefer the sidelines for now, in pursuit of a more compelling entry point (either pre or post spin).

Our sum of the parts analysis, based on a blended multiple of ~17.1x, yields a pre-spin sum of the parts fair value estimate of ~$155 billion or ~$243 per share (based on a diluted share count of ~637 million), consisting of ~$123 per share for Honeywell Aerospace and ~$120 per share for NewHoneywell. On a post-spin basis, reflecting the 1-for-2 distribution ratio, Honeywell Aerospace (NASDAQ: HONA) is fairly valued at ~$245.50 per share (based on a diluted share count of ~319 million), with NewHoneywell (NASDAQ: HON) apprised at ~$240 per share (reflecting the planned reverse 1-for-2 stock split).

Hexagon’s current valuation suggests that investors are already pricing in the strength of the Octave business and benefits of the separation

We are excited to announce that our coverage has now expanded beyond spin-offs and potential spin-offs to include, post re-org equities, exchange offers and broken IPOs. On June 8th, The Hidden Opportunities Report will be combined with The Spin-Off Report under the name Canyon River Advisors, providing clients with the only independent source for comprehensive analysis of underfollowed and mispriced opportunities across the special situations space.

Beginning on June 8th, all research publications will be emailed from research@canyonriveradvisors.com and our new client portal will be accessible at canyonriveradvisors.com. Your existing username and password will carry over to the new website. 

Please reply to this email or call Rich Albanese +1 646-839-5566 if you have any questions.

In our view, Wolfspeed (NYSE: WOLF) emerged from a pre-packaged bankruptcy back in October 2025 as a more financially sound company better positioned to capitalize on its competitive strengths in the wide-bandgap semiconductor space (silicon carbide SiC and gallium nitrate GaN) under a new but experienced leadership team. As the only vertically integrated domestic player with robust technology and commercial scale, Wolfspeed can now target an increasingly broader set of high-growth opportunities beyond its electrical vehicle (EV) powertrain roots including, artificial intelligence (AI) data centers, industrial electrification, energy storage, and aerospace & defense (with the latter having strategic national security implications). Further, we note that WOLF’s bankruptcy filing was precipitated, in our view, primarily by a capacity expansion-related financial overextension coupled with a marked/unexpected slowdown in its then-core electric vehicle (EV) end market rather than the consequence of a non-competitive commercial offering. All told, we recommend shares of WOLF given the implied upside to our base case fair value estimate of ~$77 per share (with bull & bear cases at $129 and $48, respectively).

We recommend purchase of shares given the implied upside to our base case fair value estimate of ~$77 per share.

The Middleby Corporation (NASDAQ: MIDD), a global foodservice provider of commercial cooking and industrial processing equipment, as well as residential appliances, announced, in February 2025, its intent to pursue the separation of its Food Processing business into a new, independent, publicly traded company, which will be called Midera Food Processing (and trade on NASDAQ under “MFP”), via a tax-free spin-off on a one-for-one basis that is expected to be completed on July 6, 2026.  Concurrent with the initial spin-off announcement, MIDD also added activist investor, Ed Garden (formerly a co-founder of Trian Partners and currently a ~7.5% holder of MIDD via his investment vehicle Garden Investments), as well as Julie Bowerman (the chief marketing officer at J&J spin-off Kenvue, which is in the process of being acquired Kimberly-Clark) to its 11-member Board of Directors (along with the retirement of long-time director, John Miller). Subsequently, in December 2025, the company announced a deal to sell a 51% stake in its Residential Kitchen business, which includes brands such as Viking, AGA, and Rangemaster, to 26North Partners LP at an implied enterprise value of ~$885 million, which precipitated the receipt of ~$564.5 million in cash as well as a $135 million seller note that matures in 2033 (issued by the newly formed joint venture, which was formed upon the transaction’s completion in February 2026). To that end, MIDD’s non-controlling interest in the new entity, called Composition Brands, has, as of the end of 2025, been reported as a discounted operation and will, on a go-forward basis, be reflected as a “below the line item” dubbed minority interest (and consequently excluded from the company’s adj. earnings & EPS calculations). 

In that context, the company currently reports two operating segments: 1) Commercial Foodservice (~$2.35 billion in sales and ~$550 million in adj. standalone EBITDA in 2025), which provides a range of kitchen-related equipment (e.g., cooking,  refrigeration, & beverage) to, among others, restaurants (e.g., quick serve, fast casual & full-service), convenience stores (or C-stores), supermarkets, hotels, stadiums and other institutions, such as universities & hospitals; and 2) Food Processing (~$855 million in standalone sales and $139.5 million of adj. EBITDA in 2025), which provides cooking, baking, frying and other processing/handling systems (e.g., mixers/blenders, conveyer belt ovens, presses and fillers) that support the production food products ranging from protein (e.g., bacon, sausage, poultry, lunch & alternative meats, charcuterie, hot dogs & eggs) to baked goods (e.g., bread, pastries & pizza), snacks (i.e., crackers & tortilla) and pet food.

SpinCo (i.e., Food Processing or Midera) will be led by Mark Salman, currently the president of the food processing business (since 2018), while Amy Campbell, formerly of vehicle-manufacturer REV Group, will join as the chief financial officer (CFO) and Mark Bowie, who held roles in various industries including JBT Corp (foodservice) & Circor (industrial valves), will assume the chief operating officer (COO) role. Robert Nerbonne, a director at Middleby since 2019 who has experience at several foodservice concerns, including Cooper-Atkins, Ali Group, Welbilt and Pitco, will chair the post-spin 8-member Board.  RemainCo (i.e., Commercial Foodservice or Middleby) will continue to be helmed by Timothy Fitzgerald, who was elevated to the position in 2019 after previously serving as CFO, while Brittany Cerwin, a 15-year veteran of the company’s corporate finance team, assumed the CFO role in March 2026 and James Pool, who joined MIDD in 2008 as part of the TurboChef acquisition, will serve as COO.

Management indicates that SpinCo “will become an even more focused and scaled entity, with best-in-class solutions serving attractive markets supported by favorable industry trends” with significant growth potential both organically and via M&A (where the pipeline of deals in a fragmented market remains “robust”) while RemainCo is poised to extend its “market leadership in commercial foodservice and residential kitchens” as well as fully capitalize on its “synergistic portfolio of product innovations and premium brands as we further expand our top-tier margins and continue to grow our cash generation”.  In that context, RemainCo (i.e., MIDD) will seemingly be positioned as the relatively slower growing (i.e., ~3%-6% organic sales growth) but more profitable (i.e., margins of 20% in 2026E improving to ~25%-27% in 2028E), less capital intense/higher free cash flow (FCF) generating (i.e., capex <2% of sales & FCF conversion of ~100% of net income) entity albeit being initially more levered (i.e., net leverage of ~2.8x moving to 2.5x by the end of 2026E) and more broadly focused on capital returns, primarily via share repurchases.  On the other hand, SpinCo (i.e., MFP) is purported to emerge as the faster growing concern (i.e., ~5%-7%, on an organic basis, with incremental upside from acquisitions), albeit with lower margins (i.e., ~18% in 2026E moving to ~20%-23% in 2028E), free cash flow conversion (i.e., 50%-55% of adj. EBITDA on a capex spend of ~2.0%-2.5% based on sales) and initial leverage (i.e., $200-$225 million or ~1.25x); that said, post-spin Midera management indicates comfort with flexing its leverage ratio up to ~3.0x as it pursues an active acquisition strategy.

On the indexation front, MIDD is currently a member of the S&P 500 MidCap 400 (as well as the Russell 3000); to that end, while there could be a degree of shareholder rotation post-spin we do not currently envision a material impact/dislocation (i.e., when SOLS came out of HON) in this particular case (but as a matter of course it will be something we closely monitor). For context, the current top 5 shareholders besides Garden Investments (whose ~7.5% stake is reported to have a cost basis of ~$150 per share), include T. Rowe Price (~16%), Vanguard (~10%), Blackrock (~9.5%), Ariel Investments (~3.5%) and Select Equity (~3.5%). 

All told, on a pre-spin sum-of-the-parts basis, we value Middleby at ~$182.50 per share, comprised of ~$144 per share of value from RemainCo (i.e., Commercial Foodservice) and ~$39 per share from SpinCo (i.e., Food Processing or Midera), based on a one-for-one distribution ratio.  Given the implied upside to our fair values estimate (FVE) we recommend the pre-spin purchase of MIDD shares.  Longer-term, while RemainCo will be focused on shareholder returns SpinCo could see a higher degree of re-rating if it can successfully execute on its M&A strategy (i.e., establish itself as a high-quality foodservice compounder). 

Given the implied upside to our fair values estimate (FVE) we recommend the pre-spin purchase of MIDD shares.

In October 2025, Kongsberg Gruppen ASA (“KONGSBERG” or “KOG”) announced the separation of its wholly owned subsidiary, Kongsberg Maritime, into an independently listed company, Kongsberg Maritime ASA (“KM”), through a tax-exempt demerger. Shareholders of KOG will receive KM shares on a 1:1 pro rata basis with no cash consideration. The transaction was approved at an extraordinary general meeting on January 22, 2026, and is fully structured for execution. The last day to trade with entitlement is April 22, 2026, followed by the April 23, 2026 ex-date and the April 24, 2026 record date. KM is expected to be listed on Euronext Oslo Bors under the symbol “KM ASA,” with regular-way trading commencing on April 23, 2026

The separation effectively disentangles two businesses with fundamentally different economic characteristics. KM operates as a cyclical, capital-intensive provider of vessel systems, offshore solutions, and maritime automation, with its performance closely linked to shipbuilding activity, offshore capex cycles, and broader marine end-market demand. Although the business benefits from long-standing customer relationships, an order backlog of ~NOK 28 billion and a large installed base of ~30,000 vessels, it remains more exposed to volume volatility and operates with structurally lower margins relative to the group’s defense and technology-oriented operations.

By contrast, post-spin KOG (RemainCo) will emerge as a more focused defense and advanced technology platform centered on missile systems, air defense, command-and-control solutions, and subsea sensing technologies. These businesses are well aligned with structural growth drivers, including rising global defense spending, NATO rearmament, increasing geopolitical tensions, and growing demand for autonomous & unmanned systems. Defense programs are characterized by long-cycle contracts, high barriers to entry, and strong visibility supported by multi-year order backlogs, resulting in a more resilient revenue profile and structurally higher margins.

In our view, the spin-off addresses a structural mismatch within KOG’s current portfolio, where high-growth, high-margin defense operations are combined with more cyclical maritime exposure, limiting valuation transparency and contributing to a conglomerate discount. Following the separation, both entities should be valued on more appropriate standalone frameworks, reflecting their respective growth profiles, margin structures, and capital intensity.

As independent entities, both KOG and KM will benefit from clearer capital allocation priorities, management incentives aligned with standalone performance, and improved operational focus. KOG will prioritize investments in high-return defense programs, R&D in advanced technologies, and capacity expansion in strategic markets, supported by strong cash flow visibility. Meanwhile, KM is likely to focus on cost optimization, working capital efficiency, and disciplined capital expenditure aligned with cyclical demand conditions.

For our part, we value Kongsberg Gruppen on a sum-of-the-parts (SOTP) basis, applying peer-benchmarked EV/EBITDA multiples using Bloomberg consensus for FY2027. To that end, post-spin Kongsberg Maritime is valued at ~NOK 77.7 billion using a 16x multiple, while the RemainCo is valued at ~NOK 238.8 billion, supported by a premium 20x multiple for Defence & Aerospace and 15x for Discovery.  Adjusting for net cash, pension liabilities, and minority interest results in a combined equity value of ~NOK 316.5 billion, or ~NOK 360 per share, broadly in line with the current market price. In effect, Kongsberg’s current valuation suggests that investors are already pricing in the strength of the defense business and the benefits of the separation, with limited incremental upside at this stage (following the strong share price performance post-spin announcement).  Hence our initial Neutral rating.

In the near term, trading dynamics around the separation may create divergence between the two entities. Kongsberg Maritime could see a degree of technical selling pressure post listing, particularly from passive and index-linked investors with limited appetite for standalone maritime exposure, which may create a more attractive entry point at some point. Meanwhile, we think the broader investor preference is likely to remain skewed toward RemainCo, given its pure-play defense positioning and stronger structural growth profile.