Shares of ITT Corp. (NYSE:ITT) are surging after the company said it plans to break itself into three companies due to budget cuts proposed by the U.S. defense department.

ITT stock is up 18.1 percent as of 9:47 a.m. (EDT).

Under terms of the break-up, shareholders will own stock in all three new firms, all of which are expected to be traded on the NYSE.

One company will make water pumps; a second company will comprise its defense activities, while a third company will focus on aerospace, transportation, energy and industrial engineering.