Fortive gains as it confirms it’s spinning off testing unit (update)

Update 4:55pm: Adds Fortive confirmation.

Fortive Corp. (NYSE:FTV) rose 4% in after hours trading after the company said it’s spinning off its industrial test and measurement business so it can focus on software and health care.

The remaining company will be composed of Fortive’s (FTV) industrial software and health-care business, the company said in a statement on Wednesday. Fortive CEO Jim Lico will step down after completion of the breakup.

Upon Lico’s retirement, Olumide Soroye, current President and CEO of Fortive’s Intelligent Operation Solutions segment, will be appointed as President, CEO, and director of Fortive (FTV).

“Once the spin-off is complete, Fortive will be more focused on recurring revenue and software businesses, and better positioned to accelerate growth and consistently grow earnings and free cash flow,” Lico said in the statement.

Fortive (FTV) is currently targeting completion of the spin-off in Q4 of 2025. The transaction is expected to qualify as a tax-free spin-off to Fortive holders.

In connection with announcement, Fortive reaffirmed its Q3 2024 and full-year 2024 outlook and expects that its share repurchase program will enhance its EPS growth in 2025.

In 2020, Fortive (FTV) spun off its transportation and mobility business into a publicly traded company called Vontier Corp. (VNT).

Fortive (FTV) also announced that Chuck E. McLaughlin will retire as CFO by the end of the first quarter of 2025.

News of the spinoff was earlier reported by Bloomberg. Fortive will discuss the transaction at call at 8am on Thursday.

Fortive is a spin-off itself as it was spun from Danaher Corp. (DHR) in 2016.