Abstract
Following a spin-off and an equity carve-out new shares are traded in the public equity market. What is an equity carve-out? What is a spin-off? What common objectives do they have, and what differences? We provide insights to these questions by analyzing the case of Altria and Kraft. In addition, the case raises and provides feedback on the following questions: how did Altria and Kraft account for the carve-out and spin-off of Kraft in 2001 and 2007, respectively? Why did Altria carve-out just less than 20% of its ownership of Kraft in 2001? Why did it then spin-off its remaining interest in 2007? Finally, we address the issues of gain/loss recognition in spin-offs and carve-outs.
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Notes
- 1.
All market data in this case study are as of the time of the deal. They might have changed since then.
References
Altria annual report for fiscal 2001.
Altria annual report for fiscal 2007.
Altria annual report for fiscal 2008.
Kraft annual report for fiscal 2001.
Kraft annual report for fiscal 2007.
Kraft annual report for fiscal 2008.
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Amir, E., Ghitti, M. (2020). Altria Group: The Carve-Out and Spin-Off of Kraft. In: Financial Analysis of Mergers and Acquisitions . Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-61769-1_15
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DOI: https://doi.org/10.1007/978-3-030-61769-1_15
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Publisher Name: Palgrave Macmillan, Cham
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Online ISBN: 978-3-030-61769-1
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