Spin-Off
A spin-off distributes a subsidiary to existing shareholders as a new listed firm — a separation of claims, not a sale.
Definition
Parent shareholders receive shares in RemainCo and SpinCo pro rata (tax-free if the rules are met). Indexers rebalance; forced selling appears. The economic pie is the same on day one; the listing and the incentives change.
Why it matters
Conglomerate discounts, activist campaigns, and management bandwidth all lead here. The trade is often the stub and the index flow, not a new factory.
Case
A parent spins a slow utility to ‘unlock’ a growth multiple on RemainCo. RemainCo rerate lasts until the growth misses; the utility is bought by income funds on day three.
How to read it
Map index inclusion, debt allocation, and who keeps the net debt. Day-one cheapness is often flow, not a thesis.