These figures demonstrate that, in the Middle East, the overwhelming majority of divestitures are created through share sales; corporate spin-offs
, on the other hand, are not a common way to create value, especially within diversified holding companies in the region," said Ihab Khalil, Partner and Managing Director at BCG Middle East.
is the creation of an independent company through the roll-over of an existing business/division of a company to a new legal entity.
Different types of corporate spin-offs
have different founding conditions.
We compare these "sponsored" spin-offs
to "conventional" spin-offs
in terms of long-run stock performances, return on assets (ROA), growth opportunities, capital expenditures, and earnings per share (EPS).
Shane describes this phenomenon as spin-offs
based on intellecutal capital developed at an academic institution.
Previously, such so-called comfort rulings were available to resolve questions such as (i) whether a spin-off
has an adequate corporate business purpose, (ii) whether a spin-off
will be regarded as used principally as a device for the distribution of earnings and profits, and (iii) whether a spin-off
and any prior or subsequent acquisition of stock in the Parent or the Spinco are part of a plan under section 355(e).
2002-49, another important ruling on the active trade or business requirement of a spin-off
Notwithstanding the compelling corporate business objectives of Fortune Brands' spin-off
of Gallaher, the transaction probably would not have been undertaken had the proposed regulation been finalized before the deal was concluded.
The formation of the new subsidiary provides a vehicle to consummate a transaction, spin-off
an asset to our shareholders and/or to facilitate the financing of such a transaction".
1) A number of related provisions and conforming amendments were adopted at the same time, the cumulative effect of which is to revise substantially the conditions for obtaining a tax-free separation -- whether as a spin-off
, split-off, or split-up(2) -- of one corporation from another pursuant to section 355.
25, Accounting for Stock Issued to Employees, when employers change the provisions of stock option plans following a spin-off
Why have some of the nation's most prominent corporations engaged in spin-offs