Allegheny Spinoffs Will Create L.A. Company
Allegheny Teledyne Inc. said Tuesday that it will spin off two aerospace and two electronics businesses to form a new Los Angeles-based public company as the specialty metals giant focuses on its core market.
Pittsburgh-based Allegheny Teledyne’s announcement is the latest move in a two-year effort to consolidate the company, which was created by a 1996 merger of Allegheny Ludlum Corp. and L.A.-based conglomerate Teledyne Inc.
The company also said it is proceeding with its plans to spin off its consumer products division, which will also be headquartered in Southern California. The division, which had revenue of $250 million in 1998, makes Water Pik dental equipment, shower heads and water filtration equipment, pool and spa products, hydronic boilers and water heaters.
“We’re focusing on being one of the largest and most diversified specialty metals producers in the world,” said company spokesman Dan Greenfield.
The new electronics and aerospace company, whose name has yet to been determined, will consist of Los Angeles-based Electric Technologies; Brown Engineering of Huntsville, Ala.; Continental Motors of Mobile, Ala.; and Cast Parts, which has plants in Industry and Pomona. Plant location and employees will not be affected.
These businesses had a combined 1998 revenue of $800 million, the company said.
Analysts were cautiously optimistic about the announcement.
“It’s a positive for the company, given the current business mix is much too varied,” said Shawn Narancich, an analyst at D.A. Davidson & Co. in Great Falls, Mont. “The sum of the parts should be greater than what the price [currently] tells us.”
Allegheny Teledyne shares rose 56 cents to close at $21.06 on the New York Stock Exchange.
Allegheny Teledyne has more than 2,000 employees in California. It was not immediately known how many new jobs would be created once the two firms are formed.
The company also said Tuesday that its chairman, president and chief executive, Richard Simmons, had asked the board to begin searching for a new chief executive. He did not say when he would leave the post.
Allegheny is exploring the possibility of selling its San Diego-based Teledyne Ryan Aeronautical unit and has hired Bear Stearns & Co. to advise it. The company also said it will sell its fluid systems and specialty equipment businesses in Ohio and Canada.
“The aerospace industry has already consolidated and we don’t believe [Ryan] has the critical mass to be a successful supplier to its markets long term,” Greenfield said.
