how does spin off work? division sale
tell me if this is right please:
in a spin off the existing shareholders get new shares of the spun off division and thus the existing shares of the parent company are worth less because they no longer have the revenues of the spun off division.
also,
if a company buys a division will it always be with cash? will a company ever issue stock to the other parent company for a division?
any info is appreciated. thanks
Can't comment much on this topic... but this is by far the best use of WSO.
A couple of people will share what they've learned about spin-offs from their experiences in banking... and you'll get a perspective and simplified understanding far better than anything you'll learn in class or read in a book.
You seem to always be asking simple questions that as a college recruit you're not expected to know, but will give you a far better platform of knowledge to work from so far as recruiting goes. You'll most likely have much more thought out answers (and probably more sincere) about why banking, why a specific industry, why a specific group. You'll be able to talk more knowledgeably about the industry, even if you can't explain specifics technical aspects which other candidates may memorize without having a grasp of the bigger picture.
Keep it up with the questions and keep learning, and you'll do well for yourself. Not sure if you do or not, but network in person/phone/email too, and try to get similar info from networking contacts, maybe about specific deals people have worked on. People take notice.
Important thing to note: You dont have to act like a know-it-all (al la London), flgator never attempts to show how much he knows, he just asks questions which may be called stupid by prodigious BSDs like London. London could have an internship in GS merchant banking, and Id still hire this kid over him.
Feel free to PM if you need anything.
This is a new side of you Marcus, Nice and Encouraging.
I hope this isn't permanent.
The world has changed. And we must change with it.
FL you are correct and a good example that you should read about was Altria Group's spin off of its majority stake in Kraft (KFT) and P. Morris. Altria shareholders received 0.692024 of a share of Kraft for each share held (and cash for any fractional ownership)
A company can purchase a division using cash, stock or both.
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