Lucrative Divorces

Spin-Off Trend Takes Hold

LED siemens ag
Osram was spun off from Siemens in 2013.
  • Why it matters

    Why it matters

    Many experts say spin-offs offer more positive returns for investors.

  • Facts


    • Models for corporate separations include spin-offs: With publicly-listed companies, the shareholders of existing corporation are given shares in the newly spun-off company.
    • Another model: A company seeking to raise money makes an initial public offering for a subsidiary going public. Shares held by existing shareholders, or new shares from a capital increase, are offered on the stock exchange.
    • With an “equity carve-out,” a subsidiary’s stocks are floated on the stock exchange. The parent company’s advantage is it quickly gains new capital, but as a rule retains the majority of shares and control over the spun-off subsidiary.
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There isn’t much consistency when it comes to trendy ideas among corporate consultants and analysts. But these days, companies concentrating on their core businesses are considered to be the formula for success on the market and on the stock exchange.

This means that spin-offs are in vogue, as corporations are jettisoning divisions seen as extra weight. But what how successful are these spin-offs, and what do shareholders gain from them?

Take E.ON, for example. In early September, the German energy giant spun-off its conventional fossil-fuel power business and floated it on the stock market under the name Uniper. Existing stockholders were given one Uniper share for every 10 shares of E.ON stock they held.

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