Stockhead Read all of these Quotes about Spinoff's. It will be a great move here. IMO.
Corporations go through the effort, the expense and the stress of doing spinoffs in an attempt to increase shareholder value and to give greater visibility to divergent operations. Spinoffs are usually distributed as a tax-free dividend to existing shareholders and can be partial or complete. Spin-Off Advisors, a Chicago-based research firm, reports that 62 U.S. companies had a spinoff in one form or another last year.
The idea of getting smaller may seem positively contrarian, as one giant merger after another tops the news. But companies are attracted to equity carve-outs for several reasons: First, says Andy Sanford, a director in the equity capital markets at Salomon Smith Barney in New York, "Carve-outs unlock the hidden value of one of the company's subsidiaries." In addition, says Douglas Squires, a managing director of investment banking at Merrill Lynch in New York, "Many of these transactions are motivated by investors' desire for investment clarity"--for both the parent and the subsidiary.
Spin-offs are becoming an increasingly popular theme driving the stock selection strategies of some funds. The most recent research into the phenomenon suggests that news of a corporate break-up could provide a valuable investment opportunity.
A spin-off is the sale or distribution to shareholders of new shares in a division of a parent company.
A sample compiled by Lehman Brothers shows that since 1990, the average spin-off has outperformed the S&P 500 by 13.3 per cent in its first year as a standalone company. The average parent company has outperformed by 14.4 per cent in the 12 months before the spin-off is completed.
"Most of the time, parent firms are seeking an increase in operational and strategic focus in order to unlock value," says Henry Chip Dickson, of Lehman. "In such cases, parents believe the sum of the parts is greater than the whole, and through greater focus they can increase shareholder returns."
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There is nothing wrong with spinning off as the above quotes point out. It is all on the UP and UP. And it will benefit both companies and US as shareholders big time.
Lehman Brothers was an American Express spinoff
Lucent was a spinoff from AT&T
List of spin-offs companies
Companies do this all the time.
Chipotle if a spin from MCD.
Chipotle Mexican Grill CMG
Clear Channel Outdoor CCO
Cowen Group COWN
Double Hull Tankers DHT
Mueller Water Products MWA
NUCRYST Pharmaceuticals NCST
Security Capital Assurance SCA
Spansion Inc. SPSN
SunPower Corp SPWR
Tim Hortons THI 3
Tronox TRX
Verigy Ltd. VRGY
WebMD Health Corp. WBMD
AI
