Stock Market

How Stock Spinoffs Work – And How They’ve Performed


Anyone who has watched Better Call Saul or Frasier is familiar with the spinoff concept, in which characters from an existing series branch off in a new show with a different story line. It works sort of the same way in corporate America with stock spinoffs, when firms split off a part of their business into a new, publicly traded company, usually via a tax-free distribution of the stock to shareholders of the original firm. The idea: Capitalize on a sum-of-the parts strategy, in which an undervalued business unlocks value under a new, simplified structure. 

Stock spinoffs had a strong 2022, although momentum has slowed some this year. Last year, U.S. companies announced 44 spinoffs and completed 20, totaling $61 billion in market value, according to Goldman Sachs. So far this year, through mid July, nine U.S. spinoffs have been completed, according to financial information provider Dealogic





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