eBay and PayPal split: Two other spin-offs that make sense
Activist investor Carl Icahn may have been the catalyst for eBay (EBAY) to finally announce the spinoff of its PayPal business set for 2015 but many investors, including Michael Crofton of Philadelphia Trust, have long supported separating the two companies telling Yahoo! Finance on Monday “You have Apple pay coming out, eBay has PayPal, eBay is not going to realize much more value from PayPal then they can right now because that space is getting crowded and the competition is getting a lot more intense.”
Crofton also believes tech-storage giant EMC (EMC) needs to jettison VMWare (VMW) of which it owns 80% percent. “EMC with its holdings of VMWare clearly should split itself up or spin off its VMWare or sell it to unlock value for shareholders.”
Outside of large-cap tech, crane giant Manitowoc (MTW) is poised to get a boost as the U.S. economy rebounds in 2015, says Crofton who also believes that boost could be even bigger if the company would shed its non-core assets “They own a food service business and they own a refrigeration business and range business for commercial food establishments which really doesn’t belong in their portfolio.”
Crofton predicts shares of EMC and Manitowoc could rally 20% from current levels if they decide to shed unappreciated assets, perhaps taking a cue from eBay and PayPal.
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