RE:RE:RE:RE:RE:RE:RE:Discussion on potential SPIN OFFSnowdrift wrote: Aarman4 wrote: Snowdrift wrote: kingscorpion wrote: Snowdrift wrote: kingscorpion wrote: kingscorpion wrote: Let's talk about what happens to your shares when 1 division is span out and let's say you have for ex 50000 shares What do you think happens to your shares
When a division is spanout You as a share holder automatically become share holder of the new entity You will have shares on both side of the company . Ok who is Google ing now LOL
Hi King,
I've never owned a company before, that spun out a division. In your example, when you say we would automatically become a shareholder of the new entity, would we then also own 50,000 shares of the new entity? Or would the CEO specify that for each 10 shares of PYR, ex., we would get 1 share of the new entity?
Snowdrift
If you owned say 50000 shares in the parent company When a division gets span off It will depend on its market cap to parent companies market cap So if it is 1/5 of the parent company then you will have 10000 shares in the spin off company.
Ooh, that sounds great !!! Just to be sure I understand this correctly, I'd still own my entire 50,000 shares of PYR, right? Or would my 50,000 shares of PYR get dropped to 40,000 shares?
Snowdrift: Nothing should change with your number of PYR shares if a spinoff happens......you will receive a proportional amount of shares in the spun company. If you owned 1% of PYR, you are likely to own 1% of the spun company as well, immediately after the spinoff action happens............................ If PYR shares are valued at $10 immediately before spinoff, then the morning after spinoff, PYR and SPUN together will equal $10......................so PYR might drop to $9, while SPUN is worth $1...................... after that, the two entities behave separately and either can go up or down........ Usually, if done successfully and for the right reasons, both company's shares will go up in time..... Cheers!
Thanks, your answer makes things even clearer. Here's hoping the spinned-out division does well.
I highly recommend reading up on spinoff success history, especially from Joel Greenblatt, and to a lightly lesser degree from Peter Lynch....... Joel Greenblatt does an incredible job explaining spinoff history and why they tend to be VERY good investments moyai of the time. I will likely load up on the spinoff if it makes sense, a few months after it happens.... Cheers