The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

Spinning a line on value

In an age of specialism corporate spin-offs have an inherent strategic logic. But they are also a potent way of unlocking equity value. Antony Currie reports on the spread of the technique from the US into increasingly equity conscious continental Europe.

In devising ways of unlocking equity value ­ as in so many other developments ­ the US leads, the UK picks up the theme almost simultaneously and continental Europe follows on more or less tardily. So it is with the equity technique presently in vogue with investment bankers and business managers in Europe ­ the spin-off.

In its most basic form, a spin-off enables a company to reorganize its corporate structure by initiating a separate stock market listing for a subsidiary or subsidiaries. The UK aside, the technique has not been widely used in Europe and there it has some rather formidable models from the US to live up to. One US firm, ThermoElectron, exists solely to seek out realtively obscure companies, suck them in, restructure them and spin them off. Typically it spins off between 15% and 49% of the value of a subsidiary, and to date has spun off six companies, which have themselves spun off a further 16.

Such an institutionalized approach to spin-offs is still a long way down the road for corporate Europe. But the technique is gaining in popularity and, says Dante Roscini, managing director, equity capital markets at Goldman Sachs, is becoming "a very important trend, and a useful tool for firms to achieve what has become a leitmotiv in the mid-nineties ­ to focus on one's core business".

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree