Capital Southwest plans to separate into 2 publicly traded companies

Capital Southwest Corp.'s stock is rising on news that it plans to separate its industrial and lending businesses into two publicly traded companies.

One business will be a diversified industrial growth company, Industrial Co. It will include RectorSeal Corp., Whitmore Manufacturing Co. and Jet-Lube, Inc.

The other company will focus mostly on lending to strong middle-market companies in the Southwest and across the country.

After the spinoff is complete, Capital Southwest Chairman and CEO Joseph B. Armes will continue to serve as chairman of Capital Southwest. He will also become chairman and CEO of Industrial Co. Capital Southwest's Chief Investment Officer Bowen S. Diehl is expected to become Capital Southwest's CEO after the spinoff.

The spinoff is expected to be completed by the end of 2015's third quarter. It still needs approval from Capital Southwest's shareholders.

Shares of Capital Southwest gained $2.65, or 7.2 percent, to $39.50 in midday trading.