A few posts ago I suggested that
maybe Pfizer would be more valuable if it were split into two entities. A short time ago, Kraft (KFT) split into two
separate companies. In the short time
that the two new companies have been trading, they already beat the old parent
company by $11 Billion in market cap value.
The two new companies, Kraft Foods
Group (KRFT) and Mondelez International (MDLZ), are both up significantly from
the prices they started at. Kraft Foods
Group has a solid yield of about 4%, where Mondelez (the bigger entity) has a
yield right under 2%. MDLZ trades at a
considerably lower price than KRFT, however I think both are very
undervalued. They will continue to grow
and continue to raise their dividends.
Maybe Kraft will do what their old
parent (Altria) did and break into more and more profitable companies.
Consider: MO > PM
> KFT > MDLZ
> KRFT
Altria spun off Philip Morris
International (PM) and Kraft (KFT).
Kraft split into Mondelez International (MDLZ) and Kraft Foods Group
(KRFT). If you owned Altria before they
started spinning off companies, God love you! (If you owned Altria before the
spinoffs, you would have gotten shares of all companies for free)
Will the tree grow more?
Will PM spinoff a company?
The main goal is to maximize shareholder value, and that’s exactly
what Altria did and will continue to do.
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