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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.


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


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 ?
Jordan fears the rise of hard-liners within its offshoot of the Brotherhood because they have close ties with Hamas.
Studies indicate that drug money makes most of the financing for HuT's offshoots like the IMU, al-Qaeda, and the Taliban.
Brought together by bassist Simon Fell, The Offshoot is a spin-off from a BBC commission for the Huddersfield Contemporary Music Festival.
They seek far bigger profits, and an offshoot of the business has appeared: Investors and their minions are populating websites with hip graphics and nominal online tools.
IN NOVEMBER the nonprofit group One Laptop per Child, an offshoot of MIT's Media Laboratory, unveiled a prototype of a $100 laptop meant for underprivileged kids in remote parts of the developing world.
Here at the Prospect, we bow to no one in our long-standing admiration of Global Trade Watch, the offshoot of Public Citizen that, along with the AFL-CIO, has led the way both in opposing the corporate model of globalization and positing a more democratic one.
Earth Education is here explained as a spiritual offshoot of environmentalism, and Shamanism blends spiritual perceptions with understanding of nature's cycles and connections between spirituality and the earth.
* A new, patented technology that is an offshoot of RIM has been developed by CardXX of Englewood, Colo., to encapsulate electronics into "smart cards." It is now available for license.
The Wolverhampton-based group's offshoot currently has a five-year facilities management deal covering 7,500 BT sites which was due to expire in March but will now run for a further three years.
The service is run by an offshoot of San Diego-based Horizon Ministries, and its counselors axe reportedly quoting Bible passages to gay youth, labeling them sinners, and referring them to the "ex-gay" ministry Exodus International.
Today, the Yasuda fishing company in Saitama, near Tokyo, sells a hardier strain of the Buenos Aires offshoot as exotic sashimi and sushi.
"The DLA was an offshoot of my dissertation 'The Agona Duakwa Project: A Case Study,' and it was later founded as a grassroots effort to bring computer and traditional literacy together for the people of Agona Duakwa and the Central Region" says Dr.