Split-Off

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Split-Off

A relatively rare situation in which a parent company offers to its shareholders stock in a subsidiary in exchange for a comparable amount of stock in the parent company. This allows the parent company to divest itself of the subsidiary. See also: Splitoff IPO.
References in periodicals archive ?
In contrast, a split-off does not require a pro rata distribution of stock and, thus, can result in one shareholder owning most or all of the original corporation, and the other shareholder(s) owning most or all of the newly formed company.
In a split-off, the parent transfers assets constituting an active trade or business to a subsidiary.
J could use a split-off to transfer the assets of the wedding business to a newly created subsidiary (W Co.).
After the split-off, FDI would be owned 60% by J (60 - 30 shares = 30 shares) and 40% by H (prior 20 shares).