Boston, MA 10/02/2014 (wallstreetpr) – A technology innovator in power generation systems, Babcock & Wilcox Co (NYSE:BWC) disclosed that it was weighing the options of splitting its business into two publicly traded companies. The company indicated that its evaluation process would look into the aspect whether the splitting would lead to enhanced value to its shareholders and also provide growth opportunities.
Retains Financial Advisor
The company said that it has retained its financial advisor, JPMorgan Chase & Co. (NYSE:JPM) to provide inputs on splitting of its business. While Jones Day and Wachtell, Lipton, Rosen & Katz would provide legal assistance, its statement revealed.
Babcock & Wilcox Co (NYSE:BWC) plan envisages splitting of its power Generation and Government and Nuclear business operations as two different identities and public traded companies. However, the company said that there was no guarantee that the evaluation process would lead to the logical ends. It indicated that it would be in a position to provide more details about the move during the announcement of the financial results for the third quarter in early November.
Two Units’ Recent Revenue
One of the reasons for the company’s move to split the business could be the falling revenue in both the divisions. The overall revenue for the second quarter dipped 22.6% to $686.01 million from $886.14 million, according to its earlier statement.
Its power generation generated revenue of $327.38 million in the second quarter, which was 30.5% lower than the year-ago period’s $471.19 million. It represented 47.7% of total revenue compared to 53.2% in the last year period.
Although Nuclear Operations revenue witnessed a drop of 11.3% to $293.44 million from $330.99 million, its contribution to the overall revenue increased to 42.77% from 37.4% in the previous year quarter. Revenue from nuclear energy also plunged 28.9% to $44.93 million from $63.19 million. Together with Nuclear operations and energy, their contributions to the overall revenue increased to 49.3% from 44.5% in the previous quarter.
The evaluation process should throw some light as to which division is pulling the other and whether a separate entity would allow them to have increased focus to enhance shareholders’ value.
