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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 ?
TOUR DATES: 133 SPIN-OFFS: Rock of Ages (53 dates JanApril, 42 dates Jun-July).
Serving as financial advisers to BGC are Goldman Sachs & Co LLC, Cantor Fitzgerald & Co and BofA Merrill Lynch for the spin-off, while Wachtell Lipton Rosen & Katz and Morgan Lewis & Bockius LLP served as legal advisers.
Mats Backman will, after completion of the spin-off, continue in his role as chief financial officer of Autoliv.
Meanwhile, the news about the recasting comes a few days after it was confirmed that Anneliese van der Pol is reprising her role as Chelsea in the spin-off. Chelsea is still Raven's best friend on the show, according to (http://www.eonline.com/news/809101/chelsea-s-back-anneliese-van-der-pol-returning-for-that-s-so-raven-sequel-series) E!
In certain spin-off cases, the companies' understanding of the customers was completed by direct encounters with customer's customers, with possible users, and end customers: "Our experience as an energy utility has taught us how to provide customers with different kinds of services through cables.
Don't just plan for day one of the spin-off. Plan for day two and beyond - by clearly defining the long-term value-creation strategy that will enable the spun-off entity to deliver strong and sustainable TSR.
Novo will be CEO of the yet-to-be-named company at the completion of the spin-off. Ghasemi will be the non-executive chairman of the new company, while maintaining his current roles as chairman, president and CEO of Air Products.
"We believe the spin-off of NXRT from NHF allows us to continue developing and optimizing our real estate portfolio as a standalone product," said Brian Mitts, Chief Operating Officer of NexPoint Advisors.
(NASDAQ: BEAV) has announced a further step in its plan to separate its consumables management segment, consisting of the company's aerospace distribution and energy services businesses, through a distribution, or spin-off, to the company's shareholders.
For nearly four years Ferazani was the director of Research at Institutional Research Group, where he was the lead analyst and author of The Spin-Off Report.
"The planned spin-off of our healthcare business continues our focus on creating shareholder value," says Kimberly-Clark chairman and CEO, Thomas J.
Under the spin-off, Tribune will retain broadcasting, real estate and digital assets, while Tribune Publishing will be left not only with the debt required to pay $275 million in a cash dividend, but also the responsibility to pay Tribune Co.