Spinoff is the next step to boost value

Article Excerpt

In 2021, due to activist investor pressure from Jana Partners, Labcorp carried out a strategic review. That failed to result in a sale of the company. Instead, Labcorp initiated a quarterly dividend and a $2.5-billion share repurchase program. To further boost shareholder value, Labcorp is now spinning off its faster-growing clinical development business. That new firm could become an attractive takeover target. Meantime, the split will let the remaining company better focus on its clinical testing business as the COVID-19 pandemic eases. LABORATORY CORPORATION OF AMERICA, or LABCORP, $253 is a spinoff buy. The company (New York symbol LH; Manufacturing sector; Shares outstanding: 90.4 million; Market cap: $22.9 billion; Takeover Target Rating: Medium; Dividend yield: 1.1%; www.labcorp.com) provides comprehensive clinical laboratory services from locations throughout North America. It also offers drug development services such as research and clinical trial management. In July 2022, Labcorp announced that it plans to spin off of its Clinical Development business as a tax-deferred dividend. The transaction will create two independent, publicly…

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