Bloomfield Hills, Mich.-based TriMas Corp. announced last week that it was spinning off Cequent Group, which makes a broad range of towbar and trailer accessories and accounts for about $614 million of the company’s $1.47 billion in revenue over the last 12 months.
Bloomberg reported that despite the large revenue loss, TriMas is expected to benefit because its remaining businesses in engineered aerospace, energy and packaging are higher margin and less cyclical. Cequent businesses have an 8% operating margin, while postseparation TriMas margins are expected to be about 15%, the company said.
TriMas Chairman Sam Valenti III said Cequent should benefit, too.
“Not being bound by its higher-margin neighbor means that Cequent can begin to do things in a more direct way,” Valenti said. “It can respond to its market in more and in different ways, as opposed to being a part of the family that has to have its management decisions made for the benefit of the whole.”
The new company doesn’t yet have a name, but likely would continue to use in some way the Cequent name that oversees more than 20 brands of trailers, hitches, roof racks and other accessories.
The new company also plans to keep growing via a mix of new company acquisitions and organic growth in expanding overseas markets, TriMas executives said.
TriMas hopes to complete the spinoff around June by issuing shares to TriMas shareholders in what it hopes will be a tax-free transaction. TriMas CFO Mark Zeffiro would become CEO of the new company.
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