Water Pik Spins Off to Trade on Its Own
The Newport Beach-based producer of the Water Pik brand of shower massagers, automatic toothbrushes and pool heating systems strikes out on its own Monday, facing stiff competition from a myriad of much larger corporations.
Water Pik Technologies Inc.’s stock is scheduled to begin trading Monday on the New York Stock Exchange after the company is spun off by Pittsburgh-based Allegheny Teledyne Inc., the world’s top producer of specialty metals.
Allegheny Teledyne, seeking to focus on its core metals business, also is shedding its aerospace and electronics divisions, which will unite to form Teledyne Technologies Inc., headquartered in Los Angeles.
Teledyne Technologies’ shares also will begin trading Monday on NYSE under the symbol TDY. The stock, which is trading on a “when-issued” basis, closed Wednesday at $10.50, up $2.06.
For Water Pik, independence will give the company a chance to raise funds and focus on developing new products critical to its growth, said Michael Hoopis, president and chief executive.
Water Pik recently introduced a misting shower massage that creates a steam bath environment in the shower, and the company expects to launch a new dental hygiene device next year.
The company contends sales of its water-powered dental devices have captured 80% of the market and sales of pulsating shower heads top competitors with a 35% share of the market.
But Water Pik will be squaring off against much larger competitors, such as Procter & Gamble Co., Gillette Co. and Clorox Co., and its ability to generate much-needed capital is uncertain, according to documents filed with the Securities and Exchange Commission.
“Water Pik is obviously a well-known brand,” said Mark Minichiello, an analyst with Chicago-based Spin-Off Advisors. “But one of the concerns I would have is the size of Water Pik versus its competitors. Gillette and Procter & Gamble are large players and it’s small in that universe.”
Water Pik hopes to raise $50 million within the year in a subsequent stock offering, the company said.
The SEC document did not list a price range for the stock’s debut, but the shares first traded at $10 this week on a “when-issued” basis, then slipped to $9.50 on Wednesday. The stock’s symbol will be PIK.
Steven Bregman, an analyst for the Spinoff Report said Water Pik is “a classic consumer brand kind of company” that has a good chance to succeed, but may need some time before it is a hit on Wall Street.
As part of the two spinoffs, shareholders of the parent company will receive one share of Water Pik Technologies stock for every 20 shares of Allegheny Teledyne, and one share of Teledyne Technologies for every seven shares of Allegheny Teledyne stock.
The parent company is being renamed Allegheny Technologies Inc.
In a reverse stock split, investors also will receive one share of Allegheny Technologies for every two shares they own of Allegheny Teledyne.
Allegheny Teledyne’s stock sank Wednesday to a 52-week low of $14.13 a share before closing at $14.38, down 19 cents for the day, on NYSE.
