Found while searching.......... Recently ConocoPhillips (COP) did a spin-off of part of it's company. This created the Phillips 66 (PSX) company. Each original share-holder of COP got one share of PSX for every two shares of original COP. The spin-off caused the price of COP to make a huge drop from around $70/share to around $50/share. Why was there this drop-off? Was this an automatic change because of the new PSX shares created? Or were people actually selling shares of COP? Every 2 shares of COP(old) became: 2 COP(new) + 1 PSX. So let's see if the pre-spin and post-spin values are pretty close.
4/30 Pre-spin: 2 * 71.63 = $145.26
5/1 Post-spin: 2 * 56.51 + 1 * 32.76 = $145.78
Look at the Yahoo Finance price history for COP below. It treats the spinoff as a dividend of $17.025 per share (half a share of PSX) which is exactly the right way for you to view it.
Friday, June 8, 9:13 AM Score one for the NASDAQ, after Kraft Foods (KFT) decides to list shares on the exchange beginning on June 26 in advance of its spinoff. Eventually, both Mondelez International (MDLZ) and Kraft Foods Group (KRFT) will trade on the NASDAQ and the symbol KFT will go to the ticker graveyard. 2 Comments [Consumer]
Too many unanswered questions. -If you own 100 shares of Kraft, how many shares of the two companies will you own? Will it be 100 shares of each? Will it be 50 shares of each? Will it be 100 shares of one and 50 shares of the other? Will it be a different combination? -What percentage of the assets will be going to each company? How will the liabilities be allocated? What will the pro forma balance sheets look like? -What profits are attributed to each part of the two companies? What will the proforma income statements look like? -Which executives will go to each company? When we get closer to the spinoff, these and many other questions will be answered. You will receive a nice document detailing the spinoff. If you are like me it will give you a headache reading it. If you are a stockholder, read it anyway. Until the deal is fleshed out more, no one can give a reasonable answer.