Spin-off

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Spin-off

A company can create an independent company from an existing part of the company by selling or distributing new shares in the so-called spin-off.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Spin-Off

A situation in which a company offers stock in one of its wholly-owned subsidiaries or dependent divisions such that subsidiary or division becomes an independent company. The parent company may or may not maintain a portion of ownership in the newly spun-off company. A company may conduct a spin-off for any number of reasons. For example, it may wish to divest itself of one industry so it can expand into another. It may also simply wish to profit from the sale of the subsidiary. A spin off should not be confused with a split off.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

Spin-off.

In a spin-off, a company sets up one of its existing subsidiaries or divisions as a separate company.

Shareholders of the parent company receive stock in the new company based on an evaluation established for the new entity. In addition, they continue to hold stock in the parent company.

The motives for spin-offs vary. A company may want to refocus its core businesses, shedding those that it sees as unrelated. Or it may want to set up a company to capitalize on investor interest.

In other cases, a corporation may face regulatory hurdles in expanding its business and spin off a unit to be in compliance. Sometimes, a group of employees will assume control of the new entity through a buyout, an employee stock ownership plan (ESOP), or as the result of negotiation.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
The stickiness of university spin-offs: a study of formal and informal spinoffs and their location from 124 US academic institutions.
Part I provides a primer of corporate spinoffs, explaining what qualifies as a spinoff, the motivations behind spinoffs, what previous studies on the subject concluded, and why spinoff independence in Canada is an important area of study.
The proposed regulations would require companies undergoing spinoffs to focus on the ratios of business and nonbusiness assets for each corporation involved.
An undetermined number of employees will start working out of the office at the end of March, apparently before the spinoff is complete.
Disagreements and intra-industry spinoffs. International Journal of Industrial Organization, 28(5), 526-538.
Washington, February 14 ( ANI ): The 2012 edition of NASA's annual Spinoff publication captures a nation and world made better by advancements originally achieved for space technology.
Warganegara, 2003, "Using Spinoffs to Reduce Capital Mis-Allocations," Review of Quantitative Finance and Accounting 20, 35-47.
Other spinoffs all relied too much on elements from the previous series.
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The corporation distributed the stock to Pulliam in a transaction he reported as a nontaxable spinoff. Pulliam sold 49% of the distributed Stock to his former employee, who had agreed to return and manage the funeral home.
Pension-plan spinoffs are governed by Sections 208 of ERISA and 414(1) of the IRC.