"Spinoffs are a type of corporate restructuring. The parent company issues its equity interest in the spinoff to its current shareholders. This is a tax-free distribution to shareholders of the spinoff’s stock as a dividend. Shares in the new company are not taxed as capital gains to investors which is a significant advantage. Further, activist hedge funds like spinoffs because they create individual companies that are more focused on business objectives and have a distinct identity. Large conglomerates with disparate businesses under management are slow to respond to market changes. Spinoffs allow companies to seek out more opportunity for growth. Further, spinoffs have also tended to perform well in the markets, making them even more attractive
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