Pentair to split company into two separate businesses

Pentair PLC announced Tuesday it is splitting the company into two separate businesses — water and electrical — in a tax-free spinoff.

The board of directors voted to create two independent, publicly traded companies in order to grow faster, said Randy Hogan, Pentair's chief executive, in a phone interview.

"Both businesses are top of the class in profitability and cash flow, and we believe that they can grow faster and be even more successful as independent companies," Hogan said.

Pentair is incorporated in Ireland, headquartered in London, but operationally managed out of Golden Valley. The company was founded in Arden Hills in 1966.

The spinoff of its $2.1 billion electrical systems business is expected to occur in the second quarter of 2018. The water business will maintain the Pentair name, and the electrical business will be given a yet-to-be-determined name.

The water business, which generated $2.8 billion in sales last year, also will maintain the same structure, with the Minneapolis-St. Paul area as the prime U.S. headquarters, Hogan said.

"We expect the electrical business, once spun off, will have a similar structure and have a large presence in the [Twin] Cities, whether it is Golden Valley or someplace else in the Cities," he said.

The split will not result in job cuts, Hogan said.

"To the contrary, we expect this to lead to job growth. We are going to have to stand up a separate corporate center, and while the philosophies [of the two companies] are the same, we will have the need to grow employees, particularly as we grow the companies," he said.

There are two Pentair water factories in the Twin Cities and one electrical factory. Pentair's water business specializes in sustainable water and fluid-processing applications for residential, commercial and industrial customers alike. It sells everything from aquaponics equipment for indoor fish farming to water filtration systems in food and beverage vending machines.

The electrical business includes a variety of products and services from cooling systems for telecommunications systems to high-performance pumps for oil and gas extraction.

Pentair recently sold its valves and controls business to Emerson Electric for more than $3.1 billion. The company just received the proceeds from that sale, Hogan said, making "this a great time to do it."

The separation will occur as a spinoff of the electrical business to Pentair's shareholders. The company's stock jumped 2.5 percent on Tuesday to close at $67.73.