ITT Corp. yesterday took another step in its plan to sell off some of its less successful businesses by announcing a preliminary agreement to sell 12 industrial technology companies for $370 million to Forstmann Little, a private investment firm.
Forstmann Little, which specializes in acquiring companies through management buyouts, will pay cash for the ITT companies that make products ranging from electrical products to tubular steel to vacuum pumps. None of the companies are household names.
The sale, which is expected to be completed by the end of June, will be the third major sale of ITT's assets within the past eight months. Together, the sale of these companies along with that of Continental Baking Co., parts of its Eason Oil Co. subsidiary and other subsidiaries will add more than $1 billion to ITT's coffers.
ITT is expected to use these funds to expand and improve its position in the telecommunications, insurance and financial services industries.
Earlier this year, ITT said it planned to sell a total of $1.7 billion of its holdings. The liquidation announcement came after an increasing number of financial analysts and investors criticized the company for its sluggish financial results, which caused the company to slash its annual dividend from $2.76 to $1.
Financial analysts yesterday praised the latest divestiture announcement but noted that the company still has a long way to go to meet its announced goals -- as well as the goals set by the financial community.
"This is the old 'three yards and a cloud of dust' -- nothing exciting, no 40-yard pass," said Brian R. Fernandez, an analyst with Nomura Securities International Inc. "They still have lots of large ones companies to sell," he added.
"It's progress, but only a small piece," said Herbert E. Goodfriend of Prudential Bache Securities. "It's a step in the right direction, but not enough to change my opinion of what should be done. The big pieces have yet to be dislodged," he added.
Among the pieces yet to be sold, Goodfriend noted, are all or part of Sheraton Hotels and part of the company's Hartford insurance operations. Additionally, Burpee seeds and Scott garden products also are on the auction block.