The day is coming soon when one of Hawaii’s original Big Five companies splits into two separate entities. Alexander & Baldwin (ALEX, NYSE, 52 week range 33.09 – 53.11) will become Matson, Inc. (ocean transportation and logistics) trading on the NYSE with the symbol MATX and Alexander & Baldwin, Inc. (real estate and agriculture) trading on the NYSE with the symbol ALEX.
All the present shareholders as of June 18, 2012 (the “record date”) will receive basically one share each of the resulting entities. The shares will begin trading at a valuation of 50 percent each from the closing price, i.e., if the shares close at $50 per share the resulting Matson and A&B shares will be $25 each. The transaction is considered to be a non-taxable event.
The fun will begin this Thursday, June 14, when the resulting shares trade on a “when issued” basis (Matson with the symbol MATX WI and A&B with the symbol ALEX WI). At that point, we will see where analysts’ number crunching will take the individual shares higher or lower. We wrote about this last December in “A&B: Are The Parts Worth More Than The Whole?”
On one side, shipping has more stability, especially from the U.S. West Coast and back, with government-controlled pricing and the Jones Act. But we are hearing stories of ships sitting in Chinese harbors both with cargo they can’t unload due to dropping demand and nothing to ship out for the same reason.
A&B’s real estate, with a bias to Hawaii, is definitely benefiting from the strong Hawaii tourism market, higher visitor numbers, occupancies and spending.
So what will we see come Thursday? Most will say that the overall price is built into the current valuation for A&B. I do believe that the parts are worth more than the whole but market conditions will be a short-term factor in the stock prices and their trading activity. But to make it fun, Jai Cunningham of KHON2 and I have a bet that on Friday he says Matson will be the winner. If he is right, I have to call him the “Oracle of KHON,” a la Warren Buffet. If not, he has to kiss my iPhone, all on the air. Either way, it will be fun to see where this historic event takes us, a win-win for all.