RESTRUCTURING OWNERSHIP RELATIONSHIPS SPIN-OFF

(1) Company owns or creates a subsidiary whose shares are distributed on a pro rata basis to shareholders of the parent company subsidiary becomes a public-owned company.

(2) Statistically-significant abnormal positive returns to the seller ... where division was 20% of parent size.... spinoffs to avoid regulation had higher returns than those not sold for that reasbn no adverse effect on bondholders.

(3) No positive abnormal returns for taxable spin-offs but there were for the non-taxable ... when size is adjusted for the difference is slight.

(4) Both spinoffs and their parents are morer frequently involved in takeovers nearly 33% of firms involved in spinoffs are involved in takeover activity within 3 years.
 

EOUITY CARVEOUT

(1) Typically referred to as "split-off IPOs IPO results in the stock of the subsidiary being traded publicly.

(2) Management system for asset management is likely to be restructured financial reports will now be issued by the subsidiary public market result is similar to spinoff but whereas no cash is involved in a spinoff the new stock is sold f or cash in the markets and cash is returned to the parent.