ARTICLE | Strategy
The spin on spinouts
April 26, 1999 7:00 AM UTC
The latest spate of spinouts in the biotech sector last week reflects the increased popularity of hiving off new companies and subsidiaries. Although the strategy has been associated with mature companies that want to off-load R&D from their earnings statements, in fact a surge of spinouts by still unprofitable companies has a wide range of other rationales.
In strict accounting terms, a spinout refers specifically to the distribution of a subsidiary's shares to the parent company's shareholders. But in more common parlance, the term is used loosely to label entities created by covering technology with a tracking stock or placing it into a separate legal entity such as a subsidiary...