FIRSTSERVICE CORP. $72.00 - Toronto symbol FSV

p>FIRSTSERVICE CORP. $72.00 (Toronto symbol FSV; TSINetwork Rating: Extra Risk) (416-960- 9500; www.firstservice.com; Shares outstanding: 34.5 million; Market cap: $2.6 billion; Div. yield: 0.7%) plans to spin off its Colliers International business into a new firm called Colliers International Group. FirstService will hand out Colliers shares to its own investors. Colliers is one of the world’s top three commercial real estate firms, offering a range of services around the globe. In 2014, it had revenue of $1.7 billion U.S.

After the spinoff, FirstService will carry on with residential property management and improvement, which had $1.1 billion U.S. of revenue in 2014. FirstService shareholders won’t pay income taxes on the transaction until they sell shares of the new FirstService or Colliers International.

The move adds appeal to FirstService. In our experience, and in most academic studies of the subject, both the parent and spinoff generally do better than comparable firms for at least several years after they split.

But meanwhile, FirstService trades at a high 20.5 times the $2.83 U.S. a share that it will likely earn this year.

FirstService is still a hold.

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