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That's not true. If company A is worth $200M and you split it, (assuming no other factors liked pissed off investors and/or customers) you'll have company A wor
by SoftwareMaven 15y ago
That's not true. If company A is worth $200M and you split it, (assuming no other factors liked pissed off investors and/or customers) you'll have company A worth $125M and company B worth $75M. There is no reduction in the value of the companies. Investors get five shares in A and three shares in B for every eight shares they held.
The problem here is everybody (customers, investors and pundits) thought it was a horrible idea. They thought the value of two separate companies was half the value of a single company. That is not the normal path when a company spins off a piece of itself.
- talmand 15y agoWell, I would say that a value change of $200 million to $125 million is a reduction. Although I didn't assume that investors would automatically get shares in the new company to equal the value they lose in the original company. It's nice if it works out that way but I just don't assume that kind of thing.