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ARTICLE · 07 MARCH 2013

Spinoff Techniques Revisited

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There has been a trend for a number of years for many public companies to seek to dispose of business operations that are outside of their core business or which otherwise are more appropriately owned by a separate public company, for example because their true value is not being reflected as part of a conglomerate.

CanadaTax
Peter Vair
Peter Vair
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There has been a trend for a number of years for many public companies to seek to dispose of business operations that are outside of their core business or which otherwise are more appropriately owned by a separate public company, for example because their true value is not being reflected as part of a conglomerate1.  One way of doing this would be to arrange for an arm's length sale of the business to be disposed of (referred to herein as the "non-core business") and distribute the net proceeds of the sale to the corporation's shareholders (except to the extent that any of such proceeds are considered necessary to support the core business(es)).  However, proceeding in this manner has at least three disadvantages:

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