Through a spin-off of a business unit, the parent company aims to have a positive impact on its enterprise value. The parent company often pursues the spin-off transaction to strengthen the focus on its core business, reduce negative synergies and increase operational efficiency. Based on studies already established in the literature, it is assumed that the spin-off transaction increases shareholder wealth. Despite the high relevance of spin-offs as re structuring measure, empirical research in Europe has not sufficiently addressed this issue yet. Accordingly, this paper examines both the short-term effects of a spin-off announcement for the parent company and the long-term effects of the implementation of the spin-off at the level of the parent company and the spin-off company on the European capital market. A sample of 24 European companies is examined. The time horizon of the empirical research is from January 2015 to December 2020. For the short-term study, five event win dows were chosen around the announcement date and for the long-term study, 3 event periods were chosen over 3, 6 and 12 months after the spin-off transaction. The short-term examination of parent companies yields a cumulative average abnormal return over the investigated event windows around the announcement date of 3.40%. In the long-term research, the parent company generates a buy-and-hold average abnormal return over the studied event periods after the implementation of the spin-off transaction of ?4.11%. The spin-off companies generate a buy-and-hold average abnormal return of 13.76% in the same event periods.
KeywordsSpin-Off EuropeShareholder WealthAbnormal Return Spin-Offs and Parent Companies
Achleitner, A.-K., Bassen, A., & Wahl, S. (2003). Corporate Restructuring: Instrumente und deren Anwendung in Deutschland. Finanz Betrieb, 7, 432-447.
Barber, B. M., & Lyon, J. (1997). Detecting Long-Run Abnormal Stock Returns: The Empirical Power and Specification of Test Statistics. Journal of Financial Economics, 43, 341-372. https://doi.org/10.1016/S0304-405X(96)00890-2
Brealey, R. A., Myers, S. C., Allen, F., & Mohanty, P. (2018). Principles of Corporate Finance (12 ed., Vol. 12). McGraw-Hill Education.
Brown, S., & Warner, J. (1980). Measuring Security Price Performance. Journal of Financial Economics, 8, 205-258. https://doi.org/10.1016/0304-405X(80)90002-1
Bruner, R. (2016). Applied Mergers and Acquisitions. John Wiley & Sons.
Bühner, T. (2004). Unternehmensabspaltungen als Wertsteigerungsinstrument: Eine empirische Untersuchung von Equity Carve-outs und Spin-offs in Europa. Verlag Dr. Kovač.
Burger, A., Ulbrich, P., & Ahlemeyer, N. (2010). Beteiligungscontrolling. Oldenbourg Wissenschaftsverlag. https://doi.org/10.1524/9783486710281
Chemmanur, T. J., & Yan, A. (2004). A Theory of Corporate Spin-Offs. Journal of Financial Economics, 72, 259-290. https://doi.org/10.1016/j.jfineco.2003.05.002
Copeland, T., Weston, J., & Shastri, K. (2008). Finanzierungstheorie und Unternehmenspolitik: Konzepte der kapitalmarktorientierten Unternehmensfinanzierung. Pearson.
Cusatis, P. J., Miles, J. A., & Randall Woolridge, J. (1993). Restructuring through Spinoffs: The Stock Market Evidence. Journal of Financial Economics, 33, 293-311. https://doi.org/10.1016/0304-405X(93)90009-Z
DePamphilis, D. (2014). Mergers, Acquisitions, and Other Restructuring Activities. Academic Press.
Desai, H., & Jain, P. (1999). Firm Performance and Focus: Long-Run Stock Market Performance Following Spinoffs. Journal of Financial Economics, 54, 75-101. https://doi.org/10.1016/S0304-405X(99)00032-X
Fama, E. F. (1998). Market Efficiency, Long-Term Returns, and Behavioral Finance. Journal of Financial Economics, 49, 283-306. https://doi.org/10.1016/S0304-405X(98)00026-9
Feldman, E. (2015). Corporate Spinoffs and Analysts’ Coverage Decisions: The Implications for Diversified Firms. Strategic Management Journal, 35, 1446-1463.
Glaum, M., & Hutzschenreuter, T. (2010). Mergers & Acquisitions: Management des externen Unternehmenswachstums. Kohlhammer.
Glaum, M., Lindemann, J., & Friedrich, N. (2006). Erfolg von Mergers & Acquisitions. In B. Wirtz (Ed.), Handbuch Mergers & Acquisitions Management (pp. 287-316). Springer.
Harris, O., & Madura, J. (2010). Cause and Effects of Poison Pill Adoptions by Spinoff Units. Journal of Economics and Business, 62, 307-330. https://doi.org/10.1016/j.jeconbus.2010.01.003
Hennings, R. (1995). Die Borseneinfuhrung von Tochtergesellschaften. Entscheidungsproblem im Konzern. Deutscher Universitatsverlag. https://doi.org/10.1007/978-3-322-97703-8
Hungenberg, H. (2014). Strategisches Management in Unternehmen: Ziele-Prozesse-Ver-fahren. Springer-Verlag. https://doi.org/10.1007/978-3-658-06681-9
Jansen, S. (2016). Mergers & Acquisitions. Unternehmensakquisitionen und-kooperationen. Eine strategische, organisatorische und kapitalmarkttheoretische Einfuhrung. Gabler.
Khorana, A., Shivdasani, A., Stendevad, C., & Sanzhar, S. (2011). Spin-Offs: Tackling the Conglomerate Discount. Journal of Applied Corporate Finance, 23, 90-101. https://doi.org/10.1111/j.1745-6622.2011.00355.x
Kreutter, P., Savelberg, A. H., & Weigand, J. (2007). Spin-Offs und die Evolution von Industrien. In H. Pechlaner, H. H. Hinterhuber, W. von Holzschuher, & E. Hammann (Eds.), Unternehmertum und Ausgrundung (pp. 165-196). Deutscher Universitats Verlag. https://doi.org/10.1007/978-3-8350-9541-0_9
Leinwand, P., & Mainardi, C. (2012). The Coherent Conglomerate. Harvard Business Review. https://hbr.org/2012/06/the-coherent-conglomerate
Lucks, K., & Meckl, R. (2015). Internationale Mergers & Acquisitions. Der prozessorientierte Ansatz. Springer Gabler. https://doi.org/10.1007/978-3-662-46896-8
Mazur, M. (2015). Creating M&A Opportunities through Corporate Spin-Offs. Journal of Applied Corporate Finance, 27, 137-143.
McConnell, J. J., Ozbilgin, M., & Wahal, S. (2001). Spin-Offs, Ex Ante. The Journal of Business, 74, 245-280. https://doi.org/10.1086/209672
McIvor, R. (2007). Outsourcing and the Spin-off Arrangement: Lessons from a Utility Company. Journal of General Management, 33, 51-70. https://doi.org/10.1177/030630700703300104
Michaely, R., & Shaw, W. (1995). The Choice of Going Public: Spin-Offs vs. Carve-Outs. Financial Management, 24, 5-21.
Mitchell, M. L., & Stafford, E. (2000). Managerial Decisions and Long-Term Stock Price Performance. The Journal of Business, 73, 287-329. https://doi.org/10.1086/209645
Murray, L. (2008). Spin-Offs in an Environment of Bank Debt. Journal of Business Finance & Accounting, 35, 406-433. https://doi.org/10.1111/j.1468-5957.2008.02088.x
Ostrowski, O. (2008). Erfolg durch Desinvestitionen. Eine theoretische und empirische Analyse. Gabler.
Rasmussen-Bonne, H.-E. (2011). Ausgrundung. In W. Weitnauer (Ed.), Handbuch Venture Capital: Von der Innovation zum Borsengang (pp. 228-237). C. H. Beck.
Rüdisüli, R. (2005). Value Creation of Spin-Offs and Carve-Outs. Ph.D. Thesis, University of Basel.
Schultze, G. (1998). Der Spin-Off als Konzernspaltungsform. Peter Lang.
Solactive (2022). Solactive Global Spin-off Performance-Index. https://www.solactive.com/wp-content/uploads/solactiveip/de/Factsheet_(de)_DE000SLA4GS4.pdf
Sudarsanam, P., & Qian, P. (2007). Catering Theory of Corporate Spinoffs: Empirical Evidence from Europe. https://doi.org/10.2139/ssrn.891101
Sudarsanam, S. (2003). Creating Value from Mergers and Acquisitions. Pearson Education.
Tübke, A. (2004). Success Factors of Corporate Spin-Offs. Springer. https://doi.org/10.1007/b106639
Veld, C., & Veld-Merkoulova, Y. V. (2004). Do Spin-Offs Really Create Value? The European Case. Journal of Banking & Finance, 28, 1111-1135. https://doi.org/10.1016/S0378-4266(03)00045-1
Vollmar, J. (2014). Spin-Offs, Diversifikation und Shareholder Value. Springer. https://doi.org/10.1007/978-3-658-06559-1
Wachtell, Lipton, Rosen, & Katz (2020). Spin-Off Guide. Harvard Law School Forum on Corporate Governance. https://www.wlrk.com/wp-content/uploads/2020/05/Spin-Off-Guide-2020.pdf