Climate Control, Cigarette Spinoff
Ingersoll-Rand makes a $10 billion play in the heating and air conditioning industry. Loews plans to spin off its Lorillard tobacco unit. And Insurance broker Aon Corp. is selling two of its units for $2.75 billion.
EWS AT A GLANCE
Ingersoll-Rand buys climate control business
Industrial conglomerate Ingersoll-Rand said it will buy Trane for $10.1 billion in cash and stock, creating one of the world’s largest heating and air conditioning companies. (Reuters) The $47.81 a share agreed to by Ingersoll-Rand is about 29 percent higher than Trane’s closing price Friday. The combined climate control operations will generate $11 billion in revenue in 2008, Ingersoll said, and create $300 million a year in synergies. (MarketWatch) Ingeroll said the extra revenue will help expand its line of refrigerated trucks. “The market for transporting food is very strong,” said Pali International analyst Sanjay Jha. “That’s what Trane is good at.” (Bloomberg)
Loews spinning off tobacco unit
Loews Corp. said it will spin off its tobacco subsidiary, Lorillard Inc., which makes Newport, Kent, and Maverick cigarettes. Loews also owns CNA Financial Corp., watchmaker Bulova, Diamond Offshore Drilling, and the Loews hotel chain. (AP in Yahoo! Finance) Newport is the best-selling menthol cigarette, and the second-best-selling brand, in the U.S., according to Loews. Tobacco stocks are outperforming the broader market, with the S&P’s 500 Tobacco Index up 18 percent this year. “Lorillard would be a smaller, but valuable opportunity to get some brands and share in a highly profitable market,” said Blue Oar Securities analyst Bruce Davidson. (Bloomberg)
Insurer Ace buys Aon assets
Insurance broker Aon Corp. said it is selling two of its units for $2.75 billion and that it will use the proceeds to buy back more shares. The sales are part of Aon’s plan to concentrate on its higher-margin brokerage and conulting services, rather than insurance underwriting. (Reuters) In the larger of the two sales, insurer Ace Ltd. is paying $2.4 billion to buy Aon’s Combined Insurance Co., which issues life, health, and accident insurance. In the other sale, reinsurer Munich Re is buying health-care insurer Sterling Life Insurance Co. for $352 million. (Bloomberg)
Cutting out the middle studio
As the Hollywood writers strike drags on, some member of the Writers Guild of America are looking to head out into an online, studio-free future. And venture capitalists are going along, now that advertisers have started embracing online video content. The plans range from putting content online with the hopes of selling it to studios, to forming self-supporting Web sites that run original series. The studios “are pushing us into the embrace of people that are going to cut them out of the loop,” said one show runner. “We are one Connecticut hedge-fund checkbook, one Silicon Valley server farm, and two creators away from having channels on YouTube.” (Los Angeles Times, free registration required)
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