Since pure initial public offerings (IPOs) do not trade until the ex-date, equity carve-outs
(partial IPOs) provide an opportunity to track the impact of initial and subsequent filings on parent company returns throughout the filing process from initial filing to first trade date.
Discussion includes corporate spinoffs, equity carve-outs
, targeted stock offerings, bankruptcy, reorganizations and workouts, and downsizing programs.
We examine the efficiency of initial public offering (IPO) pricing using a sample o[over 300 equity carve-outs
from 1985 to 2009.
Hand and Skantz (1998) argue that issuing new shares in equity carve-outs
can avoid tax liabilities that occur when a firm issues secondary shares (at a price above the firm's tax basis in the shares).
(1995) compared the information content of three mechanisms of restructuring: (1) equity carve-outs
, which are public offerings of subsidiary equity; (2) spin-offs, which distribute subsidiary equity to the owners of the parent firm through pro rata stock dividends; and (3) asset sell-offs, which are sales of subsidiaries to third parties.
In addition to providing clear intuition and real-life examples, this chapter also links academic research on management buy-outs, equity carve-outs
, and tracking stock to the question of how best to align shareholder and manager interests.
Spin-offs, equity carve-outs
, and initial public offerings have slowed down from their heyday in the 1990s, but these transactions will surely come into vogue again, since they can create lasting value when done right.
The results suggest that equity carve-outs
are an effective way for companies to exploit growth opportunities and increase shareholder value.
The equity carve-outs
in Tokyo work if the pricing of the U.S.
US companies have used equity carve-outs
(partial IPOs) as a reorganization tool for some time to unlock subsidiary values and to increase the parent's corporate focus or to create a pure play for the subsidiary.
In recent years, equity carve-outs
, spin-offs, asset sales, and tracking stocks have been important methods of restructuring assets and financial claims of publicly traded companies.
Between 1987 and 1994, ARGO, for instance, undertook three equity carve-outs
, requiring in all at least 26 separate agreements to delimit the boundaries of the various businesses.