Article Excerpt

TOROMONT INDUSTRIES LTD. $29.84 (Toronto symbol TIH; SI Rating: Extra Risk) (416-667-5511; www.toromont.com; Shares outstanding: 76.9 million; Market cap: $2.3 billion; Dividend yield: 2.1%) plans to break itself up into two publicly traded companies: Toromont, a distributor of Caterpillar and industrial equipment; and Enerflex, a supplier of natural-gas production and processing equipment. Under the proposed breakup, Enerflex will apply for its own listing on the Toronto exchange. Existing Toromont shareholders will then exchange each of their current Toromont shares for shares in both the new Toromont and Enerflex. As well, investors will not have to pay capital-gains taxes until they sell their new shares. After the breakup, the two companies will pay dividends that combined will equal the current annual rate of $0.64 per share paid by Toromont. That gives the shares a 2.1% yield. Toromont intends to seek shareholder approval for the transaction in the spring or early summer of 2011. Breakups like this can help unlock hidden value, and generally lead…

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