ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, March 22, 1996 TAG: 9603220063
SECTION: BUSINESS PAGE: B8 EDITION: METRO
DATELINE: NEWPORT NEWS
SOURCE: ASSOCIATED PRESS
Newport News Shipbuilding, for generations Virginia's largest private employer, will be split off from its Houston-based corporate parent, the company announced Thursday.
Tenneco Inc. said it may do the same to the pipeline business that gave the conglomerate its start 53 years ago.
Tenneco Chairman Dana Mead has hinted for months that he was moving towards making Newport News an independent company. The company is trying to steer its way clear of businesses that are vulnerable to the ups and downs of the economy and concentrate more on auto parts and packaging, which it sees as more stable.
William P. Fricks, president and chief executive officer of the shipyard, said in a letter to employees that the spinoff ``means that we will have our own stock and our own board of directors. And we will control our own future in a much more direct way than ever before.''
The shipyard, with about 18,000 employees, is primarily a government contractor. It is the Navy's only builder of aircraft carriers. Newport News Shipbuilding earned $160 million last year.
But since the end of the Cold War, the shipyard has returned to commercial ship construction, including the building of double-hull petroleum tankers.
Fricks said the spinoff would not change the shipyard's diversification strategy or its plans to take part in the Navy's new attack submarine program.
``In four years, we have built tremendous value at Newport News Shipbuilding - strengthening its position to build nuclear-powered aircraft carriers and submarines, re-entering the market for commercial ships and pursuing foreign sales of fast frigates,'' Mead said.
The shipyard ``has a seasoned and dynamic management team that has created a world-class competitor fully capable of standing on its own and thriving as a public company,'' he said.
Tenneco investors showed little surprise from the news. After rising as much as $2.50 per share during the day, Tenneco finished 37.5 cents higher at $56.37 1/2 on the New York Stock Exchange.
Tenneco said it would pursue spinning off shares of the shipbuilding business to stockholders immediately. Under the transaction, existing Tenneco shareholders get stock in the new company, which will get its own board of directors and have no formal connection to Tenneco.
The move isn't expected to result in any job losses at the shipbuilder, but up to 50 jobs at Tenneco's corporate headquarters might be eliminated.
Analyst Gary F. Hovis said Tenneco's actions were in step with a growing desire for the corporation to become more involved in packaging and manufacturing.
``Tenneco has always wanted to be a manufacturing company so this is just part and parcel of them wanting to do that,'' said Hovis, of Argus Research in New York.
Tenneco also said it was looking for ways to split its Tenneco Energy unit from the company sometime this year. Tenneco traces its roots to the pipeline business - originally known as Tennessee Gas and Transmission Co.
Fifty percent of the natural gas transported to the Northeast now travels through Tenneco Energy's 18,700-mile natural gas pipeline network, which saw a $333 million profit last year. It also has branched out into power generation and oil and gas exploration. Mead said the pipeline business' future will be decided within the next three months.
LENGTH: Medium: 70 lines ILLUSTRATION: PHOTO: AP/file With 18,000 workers, Newport News Shipbuildingby CNBis Virginia's largest private employer. color