MDU Resources Group announced on Monday its intention to pursue a spinoff of its construction services business as part of its strategic review. This move aims to enhance shareholder value and transform MDU Resources into a pure-play regulated energy delivery company.
Shares in MDU Resources rose by 2.2% to $21.23 during after-hours trading.
As a supplier of products and services to regulated energy delivery and utilities-related construction materials, MDU Resources recognizes the long-term growth opportunities associated with the continued electrification of the economy. Through a tax-advantaged separation of the construction services unit, MDU Resources seeks to optimize its position in the market.
To support its regulated energy delivery businesses, MDU Resources has allocated $2.5 billion for capital projects over the next five years. The company is currently determining the best timeline for the business separation.
According to Chief Executive David Goodin, this decision is driven by the strong financial performance of the construction services business, as well as the tax basis of the unit and current market conditions.