On October 30, 2013, United Online Inc. (NASDAQ: UNTD) reported 3Q 2013 sales of $174.7 and adjusted EPS of $0.12. The FTD business, an Internet and telephone marketer of flowers and specialty gifts, was essentially flat year over year, while revenue declined about 8% year over year at New United Online. The content and media segment, mainly UNTD’s Classmates business, continued to report paid subscription reductions. However, the quarterly decline of 30,000 paid accounts (2.9% churn rate) is the lowest since UNTD acquired the Classmates business. The communications segment also experienced a reduction in paid accounts from dial-up users as UNTD invests heavily in its wireless operations. (UNTD primarily provides dial-up Internet service under the NetZero and Juno brands, but also has entered the wireless 4G market, a potential growth area.) These results do not materially change The Spin-Off Report’s fair value estimates for either entity.

Shares of FTD Companies Inc. will be distributed before the market opens on November 1, 2013, with regular way trading scheduled to begin on the NASDAQ under the ticker ‘FTD’ the same day. Shares will be distributed on a 1:5 basis to UNTD holders as of October 10, 2013. In addition, UNTD will conduct a 1:7 reverse stock split prior to initial trading as a standalone business. Shares of UNTD could be under initial trading pressure given the long-term outlook for dial-up internet providers. Shares of UNTDV closed last night at $11.82, well below The Spin-Off Report’s fair of $15.82, based on the initial cash level and a reasonable cash flow yield for a declining business. UNTD will have net cash of about $6 per share following the separation. Continued weakness in shares could provide an attractive entry point if the market capitalization approaches cash.

The fair value estimate for FTD is $30.71 per share, largely utilizing recent valuation multiples for close peer 1-800-Flowers.com (NASDAQ: FLWS). Please see the original United Online Inc. Spin-Off Report dated June 6, 2013, and FLASH note, dated October 1, 2013, for more details.

On October 30, 2013, Ashford Hospitality Trust Inc. (NYSE: AHT) announced shares of Ashford Hospitality Prime Inc. would be distributed after the market close on November 19, 2013, with regular way trading scheduled to begin on the NYSE on November 20, 2013, under the ticker ‘AHP.’ Shares will be distributed on a 1:5 basis to AHT holders as of November 8, 2013. Trading on a ‘when-issued’ basis is expected to commence on or about November 6, 2013. The transaction still requires an effectiveness declaration by the SEC.

Prime’s portfolio includes some of the premier hotels in AHT’s portfolio, generating RevPAR (revenue per available room) of about $140 in 2012. The spin entity will also enter into option agreements with Ashford Hospitality to acquire two additional upscale properties. Ashford Prime will be externally advised by Ashford Hospitality Advisors LLC, which is a subsidiary of AHT. Following the separation, AHT’s portfolio will consist of 114 hotels with 2012 RevPAR of approximately $95.

As noted in the initial Ashford Hospitality Trust Spin-Off Report (July 17, 2013), the fair value calculations would be adjusted based on the finalized distribution ratio, capital structure, dividend policy and changes in company/industry fundamentals. The adjustments for AHT and AHP are based on a lower share count than previously estimated, the 1:5 distribution ratio, and changes in debt levels. AHT will have net debt of $2.8 billion (previously $2.5 billion) while AHP will carry $483 million in net debt (previously $614 million).

Ashford Hospitality Trust’s post spin fair value has been revised to $10.50 (from $10.76), reflecting higher net debt, partially offset by an increase in AHT’s current EV/EBITDA multiple to 12.4x (from 11.7x). The fair value includes $1.06 per share in value attributed to AHT’s 20% ownership stake in AHP. Upside exists to $11.70 if AHT’s multiple were to expand to the peer group average of 12.8x. AHT will initially maintain the current $0.12 quarterly dividend, which would represent a yield of 4.6% based on the revised fair value. Maintenance of the dividend may provide support for the stock following the transaction given the healthy yield compared to the peer group.

Ashford Hospitality Prime’s fair value estimate has been revised to $21.30 (previously $17.75 based on the 1:5 distribution). The fair value is reached by applying a peer group (high RevPAR hotel REITs) multiple to estimated 2013 EBITDA, as well as valuing hotel assets based on a multiple of RevPAR. Prime will initially set a $0.01 quarterly dividend. The combined dividend of the two entities will be 8% higher than pre-spin AHT. Additionally Prime appears to have ample room to increase the dividend payout as the $0.04 annual dividend represents approximately 22% payout of adjusted funds from operations.

On October 24, 2013, DuPont Co. (NYSE: DD) announced its Board of Directors approved plans to spin off its performance chemicals unit into a separate publicly-traded company through a tax-free distribution of shares to DD shareholders. DD will retain its segments focused on products for the agriculture, healthcare, food, and consumer electronics industries. The separation will allow DD to focus on its faster growth and steadier-margin specialized product segments, which will likely generate a higher multiple following the transaction. The spin-off is expected to be completed within 18 months. The transaction still requires an effectiveness declaration of filings by the SEC, confirmation of the tax status of the separation, and final Board approval. Management expects both companies to pay dividends in total that equal the parent’s dividend prior to separation. Capital structures and the share distribution ratio were not disclosed.

The Spin-Off Radar Screen highlighted DD beginning in August 2013. Since then, the stock is up nearly 7%, compared to a 2.7% rise for the S&P 500. Management initially disclosed that it was exploring strategic alternatives for the cyclical, commoditized performance chemicals segment, which includes Teflon and titanium dioxide manufacturing, in July 2013. Activist investor Nelson Peltz’s Trian Fund Management has been accumulating a stake in the company. However, management denied that discussions with Peltz led to the exploration of strategic alternatives. The exodus of the more cyclical business will follow the path pursued by specialty chemicals producer PPG Industries Inc. (NYSE: PPG) earlier this year. In late January 2013, PPG spun off its lower-margin, low-growth commodity chemicals business, which merged with Georgia Gulf to create Axiall (NYSE: AXLL). PPG is up 28% since the spin-off, compared to a 16% rise for the S&P 500. PPG trades at about 22x forward EPS (DD is at 16x) and 12x forward EBITDA (DD is at 10x). Commodity chemical producers such as AXLL trade at around 6.6x EBITDA and 11x EPS.

Performance chemicals accounted for about 18% of DD’s revenue in the first nine months of 2013 and 15% of segment income. Segment operating income fell more than 50% year over year through the first three quarters of 2013 due to lower titanium dioxide pricing. This chemical is used primarily as a white pigment for paints, coatings, paper, and toothpaste, among others. A competitor noted in September 2013 that the market for titanium dioxide appeared to be bottoming, while DD announced price increases. DuPont’s other product lines, which will remain with the parent, include well known brands such as high-strength material Kevlar, used in products ranging from body armor to bicycle tires, and moisture-protection material Tyvek, used in envelopes, medical packaging and construction.

Diversified chemicals producers including DD and Ashland Inc. (NYSE: ASH) trade at a sharp discount to specialized chemicals producers. ASH has also been highlighted on The Spin-Off Radar Screen for the potential to spin off lower-margin or non-core businesses. One might expect DD to trade closer to specialized chemicals producers following the separation while the spin entity may trade at a similar valuation to commodity chemical providers.

The consensus 2013 EBITDA projection for DD is about $6.6 billion. As an exercise, one may assume that performance chemicals accounts for about 15% of total company EBITDA (the segment generates slightly more than 15% of corporate D&A). Applying a 6.6x multiple, in line with the peer group, to segment EBITDA of $1 billion generates an enterprise value of $6.6 billion. Applying an 11.6x multiple to remaining EBITDA of about $5.6 billion results in an EV of $65 billion. Based on net debt of $8.1 billion and a share count of 926 million, the pre-spin sum-of-the-parts value through this rough, preliminary exercise is about $68.50 per share. The stock closed yesterday at $61.38.

On October 14, 2013, shares of Gaming and Leisure Properties Inc. began trading on a when-issued basis under the symbol ‘GLPIV’. Shares of Penn National Gaming Inc. (NASDAQ: PENN) also began trading in the when-issued market under the symbol ‘PENNV’. Shares of GLPI will be distributed after the market close on November 1, 2013, with regular-way trading scheduled to begin on the NASDAQ on November 4, 2013. Initial trading for GLPIV was around $41.20 per share.

GLPI intends to convert to a REIT beginning in 2014. In conjunction with electing REIT status, the entity plans to distribute accumulated earnings and profits (E&P) attributable to pre-REIT years. The E&P distribution is expected to total $1.05 billion, or $11.92 per share, and will be paid through a combination of cash and GLPI shares in January 2014. Management expects the distribution to consist of $3.33 per share in cash and an additional 0.35 share of GLPI.

The Spin-Off Report post-spin fair value for GLPI of $37 per share does not include the anticipated cash dividend of $3.33 per share. When including the expected cash portion of the E&P dividend, the fair value estimate for GLPI increases to $40.33. GLPI will likely experience a rotation of the shareholder base from regional gaming-focused investors to income/REIT focused investors. This rotation may result in short-term mispricing. Shares trading at a 10% discount to the fair value estimate ($40.33 pre-E&P dividend or $37-post E&P dividend) may present an attractive investment opportunity, especially given that GLPI expects to pay an annual dividend of $2.32 per share.

Please see the Penn National Gaming Inc. Spin-Off Report, dated September 4, 2013, for further details.

On September 30, 2013, United Online Inc. (NASDAQ: UNTD) filed an amended Form 10 disclosing that shares of FTD Companies Inc. would be distributed before the market open on November 1, 2013, with regular way trading scheduled to begin on the NASDAQ under the ticker ‘FTD’ the same day. Shares will be distributed on a 1:5 basis to UNTD holders as of October 10, 2013. Trading on a ‘when-issued’ basis is expected to commence on or about the record date. The filing still requires an effectiveness declaration by the SEC. In addition, as previously announced, the Board of Directors has approved a 1:7 reverse stock split for UNTD, which will occur immediately prior to the spin-off of FTD.

As noted in the initial United Online Spin-Off Report (June 6, 2013), the fair value calculations would be adjusted based on the finalized distribution ratio, capital structure, dividend policy and changes in company/industry fundamentals. The fair value revisions for UNTD and FTD are primarily based on the finalized distribution ratio and adjusted debt levels. Post spin UNTD is now expected to have a net cash position of $91.7 million (previously $60 million). FTD’s net debt position totals $189.2 million (previously $176.7 million).

In addition, FTD’s fair value has been adjusted to reflect closest comparable, 1-800-FLOWERS.COM Inc. (NASDAQ: FLWS), multiple contraction. The revised FTD fair value of $30.71 per share (previously $31.75 based on the 1:5 distribution ratio) reflects a reduction in valuation multiple to 8.5x (previously 8.9x), a slight premium to the recent trading range of FLWS due to stronger operating margins at FTD. The fair value for FTD is derived using an average of 2013E EBITDA and FCF yield (see attachment).

The fair value for post-spin UNTD has been revised to $15.82 (from $2.04) reflecting the change is share count and net cash. The fair value is based on an average of forward EBITDA, EV to forward sales, and free cash flow yield (see attachment).

UNTD will have a cash balance of $91.6 million, or $6.93 per share based on the projected share count. Following the transaction, UNTD may generate selling pressure as investors favor the potential growth of FTD. The cash balance could provide a margin of safety following the spin for investors wishing to initiate a position. The remaining UNTD businesses should continue to generate cash for several years. Paying subscriber counts at the Content and Media segment appear to be stabilizing, while expansion of the NetZero wireless offering, including a new agreement with Sprint, provides growth opportunities at the Communications segment. The stock could also benefit from UNTD’s potential monetization of its patent portfolio or further corporate restructuring. Management previously stated that strategic alternatives, including the possibility of a spin-off, were under review for the Content & Media segment. Please see the United Online Inc. Spin-Off Report, dated June 6, 2013, for further details.

On October 10, 2013, Liberty Interactive Corp., which trades under two tracking stocks, Liberty Interactive Group (NASDAQ: LINTA, LINTB) and Liberty Ventures Group (NASDAQ: LVNTA, LVNTB), announced a series of planned transactions, including the spin-off of its ownership interest in TripAdvisor Inc. (NASDAQ: TRIP), which is part of LVNTA, and its BuySeasons business, which is associated with the LINTA tracking stock, into a new publicly-traded company to be known as Liberty TripAdvisor Holdings through a tax-free distribution of shares to LVNTA shareholders. To enact the transaction, LVNTA will be attributed BuySeasons, a costume and party supply wholesaler, which is part of LINTA’s Celebrate Interactive subsidiary, in exchange for cash equaling the fair value of the business. The new entity will also hold Liberty’s 22% economic and 57% voting interest in TripAdvisor. TRIP was a spin-off of Expedia Inc. (NASDAQ: EXPE) in December 2011. Liberty’s ownership comes from its holdings in EXPE. Holders of Liberty Ventures ‘A’ or ‘B’ shares would receive one corresponding share of the new entity if the transaction is completed. The separation is still subject to a private letter ruling from the IRS regarding the tax-free status of the transaction, an effectiveness declaration of filings by the SEC and final Board approval. The spin-off is expected in 1H 2014. Following the separation, LVNTA will continue to hold Liberty’s interests in EXPE, Time Warner Cable Inc. (NYSE: TWC) and Time Warner Inc. (NYSE: TWX), which is planning to spin off its magazines as Time Inc. in early 2014.

In addition to the planned spin-off transaction, the LINTA tracking stock is expected to be recapitalized into two separate tracking stocks. If the transaction is completed, LINTA, to be renamed QVC Group and trade under the ticker QVCA, will retain the QVC subsidiary as well as Liberty’s 38% interest in HSN Inc. (NASDAQ: HSNI). The other tracking stock, to be called Liberty Digital Commerce and trade under the ticker LDCA, will hold subsidiaries Provide Commerce, Backcountry.com, Bodybuilding.com, CommerceHub, Right Start, and Evite. LINTA’s series ‘A’ and ‘B’ holders will receive a corresponding 10 shares in the new tracking stock if the recapitalization is completed. The transaction is expected in 1H 2014, subject to shareholder approval.

Liberty is controlled by John Malone, who owns 94% of LINTB and LVNTB shares, as well as 0.5% of LINTA and 1.6% of LVNTA. John Malone is well known as a consummate deal maker in the media industry, having led a wave of cable operator consolidation in the 1980s and 1990s. The transactions appear to be an effort to unlock value in shares viewed by management as currently discounted. This discount has been highlighted in The Spin-Off Report Bits & Pieces. Since the beginning of August, Liberty repurchased 8.8 million shares of LINTA for a total consideration of $206 million. About $503 million remains in the current buyback program. As of early October, Liberty’s stake in publicly traded companies approximates $6.1 billion. When excluding the value of the public holdings, the market is assigning an 8x trailing EBITDA multiple to QVC within the current Liberty corporate structure. Given that QVC’s main competitor HSNI is publicly traded, investors may want to apply HSNI’s current multiple to QVC to arrive at a valuation. HSNI currently trades at 9.4x trailing EBITDA, while QVC has generated $1.8 billion in EBITDA over the past 12 months. Applying HSNI’s multiple, QVC could be valued at $16.9 billion, which, combined with the market value of the public holdings, would suggest Liberty trades at a 14% discount to this estimated NAV. (See Bits & Pieces for more detail.)

On September 26, 2013, Penn National Gaming Inc. (NASDAQ: PENN) announced that shares of Gaming and Leisure Properties Inc. would be distributed after the market close on November 1, 2013, with regular-way trading scheduled to begin on the NASDAQ on November 4, 2013, under the ticker ‘GLPI.’ Shares will be distributed on a 1:1 basis to PENN holders as of October 16, 2013. Trading on a ‘when-issued’ basis is expected to commence around the time of the record date. The transaction still requires regulatory approval from the Indiana Gaming Commission, and an effectiveness declaration by the SEC.

Upon separation, Gaming & Leisure Properties will own 21 gaming properties. It will lease 19 of those properties back to PENN. Aside from the remaining two properties, which will be operated by GLPI subsidiaries, Gaming & Leisure Partners’ REIT structure will be little more than a mechanism to collect rent. Post spin, Penn National Gaming will primarily be a regional gaming operator. The company will enter into a master lease agreement with GLPI on 19 of the 21 separated properties.

GLPI intends to convert to a REIT beginning in 2014. In conjunction with electing REIT status, the entity plans to distribute accumulated earnings and profits (E&P) attributable to pre-REIT years. The E&P distribution is expected to total $1.05 billion, or $11.92 per share, and will be paid through a combination of cash and GLPI shares in January 2014. GLPI expects to pay an annual dividend of $2.32 per share.

The fair value estimate of $37 per share of GLPI and $14 per share for post-spin PENN remain unchanged. Please see the Penn National Gaming Inc. Spin-Off Report, dated September 4, 2013, for further details.

On September 24, 2013, National Oilwell Varco Inc. (NYSE: NOV) announced its Board of Directors approved plans to spin off its distribution business into a separate publicly-traded company through a tax-free distribution of shares to NOV shareholders to be completed in the first half of 2014. NOV will retain its drilling rig, field equipment and component manufacturing operations. The transaction still requires a Form 10 filing with the SEC, positive ruling by the IRS pertaining to the tax-free status of the transaction, and final Board approval.

The Distribution business will become a pure-play provider of maintenance, repair and operating (MRO) supplies to global energy and industrial markets, with 415 locations in 26 countries, representing 85% of the current Distribution segment’s revenue. The separation follows a series of acquisitions within the segment. In May 2013, the company completed the acquisition of Wilson Supply from Schlumberger Limited (NYSE:SLB), which followed the July 2012 acquisition of CE Franklin Ltd. (NASDAQ: CFK), both of which are distributors of pipes, valves and fittings. In 2012, the Distribution segment generated $3.9 billion in revenue and $278 million in EBITDA, ex one-time costs. The distribution business is less cyclical than the much larger rig construction operations, although both will be affected by variations in drilling activity and rig count. The Distribution segment peer group trades at a higher multiple given the greater revenue stability and cash flow. Cap-ex requirements tend to be low. Although infrastructure investment may be necessary in order to open new distribution sites. Barriers to entry are relatively low, which may pressure margins. It is a relationship-driven business based on timeliness and cost-effectiveness of delivery. Locations near active drilling areas may be paramount.

The distribution business could be compared to WESCO International, (NYSE: WCC), MRC Global (NYSE: MRC) and DXP Enterprises (NASDAQ: DXPE). These companies tend to serve more diverse end markets than NOV, which may provide for less cyclicality. Applying a blended 2012/2013 EV/EBITDA multiple of 10.4x to a trailing twelve month Distribution segment EBITDA of $341 million results in an enterprise value of $3.6 billion.

Following the separation, NOV will generate revenue of approximately $16.1 billion and EBITDA of $3.7 billion from the manufacture of oilfield equipment including drilling rigs, top drives and coiled tubing. The business is far more capital intensive than the distribution business and will exhibit much more cyclicality. Oilfield equipment providers include Cameron (NYSE: CAM), Aker Solutions (AKSO NO) and Weatherford International (NYSE: WFT).

One may note that peers with greater involvement in new rig or rig equipment construction (NOV, AKSO) are projected to report declining EBITDA in 2013, largely the result of a falling rig count due to lower natural gas prices. A modest recovery in natural gas prices has led to rising gas-focused rig count in later summer-early fall 2013, according to Baker Hughes. This may augur well for these businesses into 2014. Applying an 8.8x multiple to TTM NOV EBITDA (minus the Distribution segment) of $3.7 billion results in an enterprise value of $32.6 billion. The sum-of-the-parts EV based on this rough, initial exercise is about $36.2 billion. NOV had an EV of $35.5 billion as of last night’s close.

On September 27, 2013, Newcastle Investment Corp. (NYSE: NCT), a mortgage and senior housing REIT, announced its intention to spin off its media assets through a taxable distribution of shares to NCT shareholders in early 2014. Simultaneous to the announcement, the spin-off entity, New Media Investment Group Inc., filed a Form 10 with the SEC. The entity intends to apply for listing on the NYSE under the ticker ‘NEWM’. The spin-off will comprise the Dow Jones Local Media Group assets acquired from News Corp. (NASDAQ: NWSA) for $87 million earlier in September, as well as Gatehouse Media group assets. Gatehouse entered a pre-packaged bankruptcy also on September 27 supported by Newcastle, which owns 52% of the approximately $1.2 billion in debt. The spin-off still requires an effectiveness declaration by the SEC, as well as final Board and bankruptcy court approval.

Newcastle acquired Gatehouse debt in 2007. The restructuring will allow the debt to be converted into equity. As a REIT, NCT is not structured to operate a media subsidiary long term. Upon emergence from bankruptcy, a spin-off appeared to be the most practical option for dealing with these assets. Spinning off this business will allow NCT to focus on collapsing its remaining collateralized debt obligations (CDOs) and purchasing additional senior housing assets. Following the separation, New Media will be externally managed by FIG LLC, an affiliate of Fortress Investment Group LLC (NYSE: FIG), as is NCT. Chairman Wesley Edens is Co-Chairman of Fortress. As of June 2013, Fortress owned 6.1 million shares of NCT with an option to purchase an additional 21.8 million shares, representing more than 8% of common stock fully diluted.

Newcastle previously spun off its excess Mortgage Servicing Rights (MSRs) and debt into New Residential Investment Corp. (NYSE: NRZ) in May 2013. Since the commencement of regular-way trading, the mortgage REIT sector has not performed well given concerns of rising interest rates and Federal Reserve tapering.NRZ is down 5%, NCT 1%, while the Dow Jones US Mortgage REITs Index is down nearly 20%. At the time of the separation, The Spin-Off Report valued NCT on a sum-of-the-parts basis at $11.69 per share. As of September 27, the combined value of NCT and NRZ was about $12.39 per share. Shares of NRZ were distributed on a 1:1 basis.

The spin-off entity includes 404 community publications, 343 related websites, 313 mobile sites and six yellow page directories, reaching about 10 million people each week. Pro forma 2012 revenue totaled $653 million and adjusted EBITDA of $81 million. Publications include local community papers, and ‘free’ shoppers. Advertising revenue continues to decline, but circulation revenue has begun to stabilize. On a valuation basis, the $230 million NCT media investment, could be valued at about 2x book, in line with other newspaper publishers such as AH Belo Corp. (NYSE: AHC), to reach a value of about $1.57 per share based on a 1:1 share distribution. Given the lack of analyst coverage the spin-off will likely receive and the differing sector from the parent, one could see immediate selling pressure following the separation. Assuming NCT reaches $400 million in senior living investments by the end of the year, and those investments are valued with other senior housing peers, at about 2.3x, while the remaining assets are valued at about 1.3x, the post-spin parent would be valued at about $4.17 per share. The sum-of-the-parts valuation from this preliminary analysis is only modestly above the current share price.

On September 19, 2013, Agilent Technologies Inc. (NYSE: A) announced its Board of Directors approved plans to spin off its electronic measurement (EM) products business into a separate publicly-traded company through a tax-free distribution of shares to A shareholders to be completed by the end of 2014, while retaining its life sciences and diagnostics business. Agilent was a spin-off of Hewlett-Packard Company (NYSE: HPQ) in 2000. The transaction still requires a filing of a Form 10, positive ruling by the IRS pertaining to the tax-free status of the transaction, meeting foreign regulatory requirements and final Board approval. Both entities will seek to maintain leverage ratios below 2x. The parent, which will keep the Agilent name, intends to maintain a dividend at around the same yield. Bill Sullivan will remain CEO of the parent, while the current president, Ron Nersesian, will assume duties of CEO for the spin entity.

The two entities serve different markets. The EM business is more cyclical and growing at a slower rate, but has a slightly higher operating margin. The parent is likely to receive a higher multiple given its reduced cyclicality and better growth prospects. Its peer group currently trades at a higher multiple. The ability to be included in industry-specific ETFs also may expand as the life sciences- and communications-focused segments are separated.

Post-spin Agilent generates about $3.9 billion in annual revenue (about 41% recurring) with an operating margin of about 18%. The entity, based in Santa Clara, CA, has about 11,500 employees. Key platforms include gas chromatography, spectroscopy and nuclear magnetic resonance. The instruments and software are used to measure and analyze the physical and biological properties of various substances. The largest end markets include pharmaceuticals and biotech, as well as chemicals and energy. Oil refiners and food producers use the services to measure end products. According to management, markets for the company’s products are expected to grow at a 4-6% compound rate.

The new Electronic Measurement Company generates about $2.9 billion in annual revenue with an operating margin of about 19%. The spin-off will be based in Santa Rosa, CA, and will have about 9,500 employees. The stock listing and ticker are yet to be determined. The entity produces products and services for the communications, aerospace and defense, and semiconductor industries. Services are used to test communications networks, new handsets, semiconductors and other electronic products. Markets for its products and services are projected to expand at a 3-4% compound rate, according to the company.

Agilent has a history with spin-offs and separations. In 2006, Agilent spun off Verigy (NASDAQ: VRGY) in a two-stage process beginning with a June IPO priced at $15 per share, valuing the company at around $875 million. The remaining shares of the semiconductor test equipment producer were distributed to Agilent shareholders five months later. Verigy was acquired by Advantest Corp. (NYSE: ATE) in 2011 in a $1.1 billion deal.

The Electronic Measurement business could be compared to National Instruments Corp (NASDAQ: NATI), Aeroflex Holding Corp. (NYSE: ARX), Anrista Corp. (6754 JT), Teledyne Technologies Inc. (NYSE: TDY) and Cadence Design Systems Inc. (NASDAQ: CDNS). Excluding the outliers NATI and CDNS, Electronic Measurement peers trade at approximately 10x F2013 EBITDA and 1.8x F2013 estimated revenue. The New Agilent peer group trades at 3.2x F2013 revenue projections and 14.1x F2013 estimated EBITDA. Applying the multiples to management’s revenue and operating margin guidance results in a sum-of-the-parts EV ranging between $17.5 billion and $17.7 billion. Based on net debt of $374 million and shares outstanding of 331 million, this rough, preliminary exercise values the company at around $52 per share.