Doubts

CH 7 - M&A Doubt

CH 7 - M&A Doubt

by Alessandro Imbrogno -
Number of replies: 2

Dear Julio,

I hope you are doing well.

I was going through the video on Chapter 7 – M&A and found myself struggling to understand the difference between a spin-off and a carve-out as methods for partial restructuring of a firm.

Could you please explain a bit more about the difference between these 2 alternatives?

Kind regards,

Alessandro

In reply to Alessandro Imbrogno

Re: CH 7 - M&A Doubt

by Lorin Yuezer -
Hi Alessandro,

In a spin-off, a company creates a new, independent entity by separating a division or business unit. Shareholders of the parent company receive shares in the new company. No money changes hands – it’s like giving shareholders an extra piece of the business. After the spin-off, the parent company no longer owns the separated part.
Example: E.ON spun off Uniper and distributed its shares directly to E.ON’s shareholders.

In a carve-out, the company sells part of a business to outside investors, usually through an IPO. The parent company typically retains a controlling stake in the carved-out unit (at least for a while), but raises capital by selling a portion of it to the public.
Example: Siemens carved out part of its energy business and brought it to the market as a separate listed company – Siemens Energy.

I hope that helps :)

Best,
Lorin