Tandy Plans Spinoff of International Operation
FORT WORTH, Texas (AP) _ Tandy Corp., a consumer electronics giant, said Monday it has tentatively approved the spinoff of its international retail operations into a separate public company with its own issue of stock.
The plan, given a tentative nod by the board of directors in a special meeting, calls for the creation of a new company called Intertan Inc., which would operate Tandy’s estimated 2,000 international retail stores, Tandy officials said.
The spinoff should benefit both Tandy shareholders and Tandy’s international business, said analyst Eugene Glazer of Dean Witter Reynolds Inc.
Tandy’s international retail business has estimated annual sales of $400 million and assets of $250 million, company officials said.
Intertan would have two principal subsidiaries, Tandy Electronics Ltd. in Canada, which would operate outlets in Canada, the United Kingdom, France, Belgium, West Germany and the Netherlands, and Tandy Australia Ltd. with outlets in Australia.
The spinoff would include the Radio Shack and Tandy Electronics stores, as well as other retail outlets.
Garland Asher, Tandy director of financial planning, said the international retail operation accounts for about 13 percent of the company’s estimated $3 billion in annual sales.
Tandy said in a written statement it anticipates Intertan’s common stock would be traded over the counter. Tandy Corp. stock is traded on the New York Stock Exchange.
Asher said the plan calls for one share of Intertan stock to be issued for every 10 shares of Tandy stock.
″We’re doing it because we think it would be a pretty good deal for (the shareholders),″ he said.
Company officials said the plan calls for authorizing 20 million new shares of stock and issuing 8.9 million.
Asher said approval is needed from some foreign agencies and the Internal Revenue Service.
″We don’t want the distribution of shares of Intertan to be considered a dividend,″ Asher said.
Glazer, technology analyst for Dean Witter, said the company has undertaken similar spinoffs in the past, as when Tandy Crafts was made a separate company in 1975.
He said he didn’t expect any serious problems with getting IRS approval of the latest plan.
Glazer said there would be ″some moderate overall enhancement″ for shareholders with the issuance of the new stock. He also said the proposed spinoff should strengthen Tandy’s international operation, which has stores operating under the name of Radio Shack and Tandy Electronics.
″They have not been a strong factor in the international market,″ Glazer said. He said the proposed spinoff shows ″they are feeling confident they have the right management team abroad.″
Dean Witter describes Tandy as the largest domestic retailer of consumer electronics, with more than 9,000 outlets worldwide. About half of those are the Radio Shack stores.