Topic: How To Invest

Spinoffs & Takeovers Hotline – Friday, January 22, 2021

Article Excerpt

INTERNATIONAL BUSINESS MACHINES CORP., $118.61, symbol IBM on New York, is your #1 Spinoff Buy of the Year for 2021. The company’s shares have lagged other big tech stocks in the past year. That’s mainly due to concerns that IBM’s older, slower-growing legacy businesses were holding back its faster-growing cloud computing operations. But IBM now plans to spin off its Managed Infrastructure Services business, which helps corporate and government clients manage their datacentres. In the 12 months ended June 30, 2020, that unit had revenue of $19 billion, or 24% of IBM’s total revenue. The new infrastructure company—to be twice as big as its nearest competitor—will have 4,600 clients in 115 countries. The current $60 billion order backlog helps cut risk. IBM has yet to announce the terms of the spinoff. However, investors will only be liable for capital gains taxes when they sell their new shares. The company expects to complete the transaction by the end of 2021. As well, the combined dividends from…