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Spin-off definition

A corporate that can have a material impact on the surviving company's financials, stock price, benchmark weight, risk and market characteristics.

Beginner

Spin-off is a corporate action where a company separates a business operation and creates a completely new entity, normally as another public company. These are rare, occurring for about 2% to 3% of large US companies annually. Shareholders receive shares of the new entity and the value of their current stock drops by the same amount. Some pricing services account for spin-offs as special dividends.


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Quiz

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From the time a corporate spin-off is announced, it normally takes how many quarters until completion? | 1 Quarter, 2 Quarters, 3 Quarters or More than 3 Quarters?

More than 3 Quarters

In a Sentence

Doc:  Can someone explain the logic for why the Board of Directors would initiate a spin-off ?
Tom:  Wouldn't it be like a pastry shop selling the best piece of a pie at a higher price than the other slices?

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Keywords:
spin-off
corporate action
special dividend
discontinued operations
accounting
Board of Directors
stock
investment
financial modeling