Spin-offs and de-mergers: Vetting investment opportunities in a spin-off
By Malvika Saraf and Parthajit Kayal
Many a time a company creates a new independent business through sale or distribution of new shares of an existing business. This is known as spin-off or de-merger. The independent business gets assets, employees, technology, intellectual property, or existing products from the parent company. The spun-off businesses are expected to be worth more as separate independent entities than as parts of a conglomerate or larger business. After the spin-off, shareholders of the parent company receive equivalent shares in the new company. They may then buy and sell stocks from either company independently. Many investors look for such an event for superior investment opportunities.
Spin-off investment performance In
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