Entergy's Spin-Off Plan: Considering the Alternatives

The Entergy (ETR) stock spin-off of its nuclear power plants has been in the hands of the regulators for some time. Apparently, Entergy is thinking that if it can’t get its nuclear business separated by spinning it off, then maybe it can do the reverse. And why not? If the point of a stock spin-off is to end up with more focused, effective entities that each will do better on their own. What does it really matter which part is the parent?

Recently the Wall Street Journal wrote:

“Entergy Chairman and Chief Executive J. Wayne Leonard with saying that the company could spin off its utility businesses into a stand-alone company to accomplish the same goal of separating its regulated utility businesses concentrated in the Southeast from its nuclear plants that sell power at market prices.”

The article is worth reading if you are following Entergy’s efforts from another point of view.

The question for us may end up being, ‘which one is the parent?’ We, of course, want the one whose stock price is going to go up the most, the fastest whatever it ends up being called. I guess that’s the one whose real value has been bound up the most in the present organization. Is it the utility that is stuck with the nuclear power plants or the nuclear power plants that are stuck with being part of a utility whose main focus is in another part of the country?

We can just keep watching it unfold. There seems to be plenty of time for that.

Comments

[Butch]

Seems like a holding company a la Exelon wold be the best solution. Regulators like stuff to regulate and what could be more fun than nuclear power stations. Better yet, sell the business to Exelon. And, no, I am not an Exelon employee. Just a stock holder.

2009 Nov 05 01:35 PM