Marketing Analysis Of Divestitures Of Corporate Asset

1520 Words Apr 26th, 2015 7 Pages
Introduction
Divestitures of corporate asset have a variety of forms, including sell-offs, leveraged buyouts, and spin-offs. A spin-off is a pro-rata distribution of the shares of a firm’s the newly formed subsidiary to the shareholders of the original company (parent company). Unlike other types of divestitures, a spin off doesn’t involve exchange of cash. In other words, there is no cash transaction taking place in spin off. Therefore, a spin-off is not generated by the company 's motivation of generating cash flow benefits. Nevertheless, spin-off is not a costless transaction. Since a spin-off is associated with the cost of registration, new share distribution and dividend payment. Both the parent company and spun off company traded separately as the consequence of spin-off. Also, the subsidiary operates independently from the parent company. After the spin-off, the shareholders of the parent company hold shares in both the parent company and the subsidiary. Therefore, the performance of parent company and spun off company can be analysing as separate entities.

The objective of this paper is to examine shareholder wealth that attributed from Man Group plc announce spin-off of MF Global by listing MF Global in the New York Stock Exchange (NYSE) on 21 June 2007.It focuses on the performance of parent company (Man Group plc) at the announcement of spin off proposal as well as the long run performance following this event. To identify the wealth effect of spin-off…
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