NEW YORK, Feb 18 (Reuters) - Shares of Madison Square Garden Sports rose more than 16% to hit a record high on Wednesday after the company said it has approved a plan to explore a possible spinoff to separate its New York Knicks franchise from its New York Rangers businesses.
Madison Square Garden Sports' shares also reached their highest daily percentage gain on record after closing at $341.76.
After the planned spinoff, the New York Knicks company would include the Knicks franchise in the National
Basketball Association as well as its affiliate in the NBA G League, the Westchester Knicks.
The New York Rangers company is expected to include the Rangers, which feature in the National Hockey League, as well as its affiliate in the American Hockey League, the Hartford Wolf Pack.
Madison Square Garden Sports said the proposed deal won unanimous board approval and the transaction is expected to be structured as a tax-free spinoff to all shareholders. No timetable has been set to complete the proposed transaction, the company said.
Among the eight analysts covering Madison Square Garden Sports, the average rating is "buy" and its median price target is $337, according to LSEG data.
BTIG analysts said in a note that management has been vocal about exploring options as its equity at times trades at a 50% discount to independent private value estimates.
"The single largest catalyst investors have been looking for is ways to unlock value from the teams whether that be minority sales, spin-offs, outright sales or some other means to close the public-private valuation gap," said BTIG analysts led by Tyler DiMatteo, who assigned a "neutral" rating to Madison Square Garden Sports.
(Reporting by Chibuike Oguh in New York, Editing by Nick Zieminski)
