The facts about … stock carveouts

Article Excerpt

Stock carveouts are also known as split-off IPOs or partial spinoffs. They’re a type of corporate reorganization where a firm uses an initial public offering to sell partial or minority interest in one of its subsidiary. It retains the rest—typically about an 80% stake. By listing shares in the new company, the parent is able to assess the true market value of its subsidiary. It also gives the carveout a track record as a public company with its own financial statements. A carveout has many of the benefit of an outright spinoff: as a standalone stock, it has greater access to capital and its own dedicated CEO and board of directors. A carveout is often, but not always, followed by a spinoff, where the parent company hands out its remaining interest to its shareholders. In our last issue, we looked at a carveout by Huntsman Corp. Using an IPO, it sold 22% of its chemical-products division, Venator Materials plc (symbol VNTR on New…

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