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Finance Dictionary and Glossary of Investment Terms
An independent company created from an existing part of another company through a divestiture, such as a sale or distribution of new shares.
When a company decides that a subsidiary needs to stand on its own, it might do a spinoff, distributing shares of the new entity to existing shareholders, or selling the new business to its managers or even its employees. There are many possible reasons for a spinoff. Management may decide, for instance, that this is a way to maximize shareholder value. Or it may be decide that the subsidiary is not earning the kind returns that other units of the company generate.
A new, independent company created through selling or distributing new shares for an existing part of another company.