ITT Corp (NYSE:ITT) Soars on News Company Splitting

The announcement by ITT Corporation (NYSE:ITT) that they are going to split into three companies has resulted in the share price of the company skyrocketing Wednesday, the highest level they have traded at since fall of 2008.

The split of the company will be as follows: ITT will continue on as a firm serving the industrial engineering, energy and aerospace sector. Another company will focus on defense equipment, and the third company will build water pumps.

In December ITT said their water pumps business and transportation markets would drive 2011 earnings for the company. Defense spending on the other hand will plunge for the year, making ITT a stronger company, but obviously a weight on the new defense entity spinning from them.

Water sales generated revenue of $3.4 billion in 2009. Defense drove sales of $6.3 billion in the same year. Announced military budget cuts make that a weakened segment of the company going forward.

Shareholders will end up owning shares of stock in all three companies once they're split. It is presumed they'll all trade on the New York Stock Exchange.

After the spin-offs, existing CFO Denise Ramos will be CEO of the new ITT. Heading up the defense business will be David Melcher, and the water business will be run by Gretchen McClain, who is now president of the fluid and motion businesses.

ITT said the move "creates substantial value for shareholders as the higher growth segments will likely receive appropriate multiples. Despite the significant appreciation, we believe investors are likely to see further appreciation throughout the year...."

Wedbush increased their price target on ITT from $58 to $70.

ITT was trading at $60.79, up $8.01, or 15.18 percent, as of 3:01 PM EST.