Trying to understand spinoffs better so this might be a dumb question… when the spinoff occurs, are you saying SpinCo would be held onto while people would selloff RemainCo thereby driving down the price?
Guess I’m trying to follow the mechanics of why a higher spinco price automatically equals a lower remainco price
Pre-spin, shares trade at $80 today... if shares of SpinCo start trading (when-issued) at $60, that implies RemainCo is trading at $20
It's never that clean, but that's the gist of it... more likely would be a post-spin scenario where investors are more excited about SpinCo because it's larger and better, and sell their shares of RemainCo... that could make it interesting
Occasionally, you run the math and the sum of both pieces look attractive and it's worthwhile to own pre-spin... I don't think that's the case with CTVA today though
Trying to understand spinoffs better so this might be a dumb question… when the spinoff occurs, are you saying SpinCo would be held onto while people would selloff RemainCo thereby driving down the price?
Guess I’m trying to follow the mechanics of why a higher spinco price automatically equals a lower remainco price
Pre-spin, shares trade at $80 today... if shares of SpinCo start trading (when-issued) at $60, that implies RemainCo is trading at $20
It's never that clean, but that's the gist of it... more likely would be a post-spin scenario where investors are more excited about SpinCo because it's larger and better, and sell their shares of RemainCo... that could make it interesting
Occasionally, you run the math and the sum of both pieces look attractive and it's worthwhile to own pre-spin... I don't think that's the case with CTVA today though
Hope that helps!
This makes sense. Helps to understand the mechanics of these things…. Thanks!