What happened
On Monday, auto parts supplier BorgWarner (BWA +4.43%) completed the spinoff of its fuel systems and aftermarket businesses into a new publicly traded company. The all-stock split is creating confusion on some websites that track stock prices, causing BorgWarner shares to appear down more than 10% in Wednesday trading.
So what
BorgWarner is an automotive industry specialist that traces its roots back to 1928, but the company is a standout for investors these days due to its focus on the future. It's making moves to position itself as one of the most important parts suppliers in the electric vehicle segment, and that has meant parting ways with some of its legacy assets.
On Monday, the company passed a major milestone in that effort when it completed its spinout of Phinia to shareholders. The new company includes much of what used to be BorgWarner's internal-combustion engine business, as well as the spare parts business that supports that operation.
Terms of the deal called for existing BorgWarner shareholders to both retain their shares in that company and receive shares in Phinia. That means the total value assigned by the market to BorgWarner on Monday is now split among shares of both companies.
On Wednesday, some websites had not yet updated their systems to reflect the split, causing BorgWarner to be listed as down by more than 10%. In reality, the value of what remains of BorgWarner was up by less than 2% as of 11:30 ET on Wednesday.
NYSE: BWA
Key Data Points
Now what
The short-term noise around the stock price should clear up as the hours go on. The long-term potential of BorgWarner is unchanged.
The company is now well on its way toward completing the "Charging Forward" strategic plan that management unveiled two years ago, divesting itself of upwards of $4 billion in internal combustion-related revenues in the process.
With the Phinia deal complete, BorgWarner is more of a pure play on an electric vehicle future.
