swaz, The NMKT parent currently has majority ownership of many private companies.
Right now they report all the consolidated financials of all the subsidiaries on the nmkt balance sheet.
The nmkt plan is to publicly list all the existing subsidiaries separately. But the financials will still be reported under the nmkt parent company.
The numbers will also be reported in the separately listed public companies. This will allow the separate public companies to be valued on their own merits and accomplishments.
So for example
Nmkt china 20mil rev profit 200k
Nmkt voip 10mil rev 100k rev
Nmkt sys init 20mil rev 100k profit
Nmkt parent 20+10+20= 50mil rev
Profit 200+100+100= 400NI
Splitting everything apart like this should give nmkt as a whole a higher valuation.
Many holding companies do this and it is usually a formula for success.
Here especially it looks like the sum of NMKT's parts is worth more than the whole. There is no guarantee that the nmkt parent will be worth more than its subsidiaries.
NMKT china might achieve a .50 cent pps but the nmkt parent might languish at a lower pps than its smaller publicly listed segments.
It does seem that smaller segments that are spun-off from a bulky entity do attain a higher valuation than its larger conglomerate parents. I would not be surprised if the same happened here.
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."
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."
List of spin-offs companies do it all the time.
Chipotle if a spin from MCD.
Lehman Brothers was an (AMEX) American Express spin-off
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
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