Morton Thiokol Will Spin Off Its Aerospace Division

CHICAGO —  Morton Thiokol Inc. said Monday that it will split the company in two, separating the aerospace operations from its specialty chemicals, air bags and salt businesses, which will become an independent company.

The aerospace business has been operating under a cloud ever since the shuttle Challenger exploded in January, 1986, soon after liftoff. The disaster was linked to problems with rocket boosters manufactured by Thiokol.

The name of the existing company--formed in 1982 by the merger of Morton-Norwich, which owned Morton Salt, and Thiokol Corp.--will be changed back to Thiokol Corp.

The chemicals and air bags group will be named Morton International Inc.

‘Pursue Objectives’

“This moves separates two businesses with distinct financial, investment and operating characteristics so that each can adopt strategies and pursue objectives appropriate to its specific businesses,” Chairman Charles Locke said in a statement released after the stock market closed.

Locke and S. Jay Stewart, president and chief operating officer, are expected to be elected to corresponding posts at the new Morton International.

A spokeswoman said Morton Thiokol management is conducting an outside search for a chairman to head Thiokol.

The terms of the spinoff call for each shareholder to receive an equal number of shares in the new company.

Morton Thiokol said the spinoff should help boost stockholder equity, pushing the combined share prices above current levels. The announcement was made after Morton Thiokol closed at $40 a share Monday, unchanged from Friday.

$800 Million in Assets

Morton Thiokol had sales of $2.32 billion in fiscal 1988. The remaining Thiokol will have sales of about $1.1 billion and assets of $800 million, the company said.

While aerospace provided a large percentage of revenues, the division has been under a cloud since the 1986 explosion of the Challenger space shuttle.