In article <bfcdf814.0402020724.41d91ba7[at]posting.google.com> , Harry
<rateofreturn[at]lycos.com> wrote:

- quote -

Companies spin off for a variety of reasons. Here are few...

1) Parent company thinks that the child company will be worth
more in the open market if it traded on its own. This is a way
to bring out hidden assets. For example, Hughes is owned by
GM, but often gets lost in the GM corporate structure. As a
seperate company, analysts can follow Hughes as a seperate
company.

2) Parent company wants to get rid of the child, so they
seperate it out to make the future sale easier. This could
be due to the child losing money, the child needing more
capital than the parent is willing to supply, or the child
just not being in a business that is of interest to the parent.

3) Child division does not meet its return on investment
goals. The idea is that the parent creates a seperate division
out of the child, then sees if it will sink or swim on its own.
They will sometimes set the child free, and let the market do
with it as it will.

4) Parent company is in some kind of trouble, and needs to
raise money. Selling off a child, or doing an IPO for a child
is an easy way to raise money without diluting the parent stock
or selling more bonds.

-john-

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John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
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For example, why is it that ATT Wireless is a division of ATT,
however, both have their own ticker symbols?

What is the opposite of spinning-off - a merger?