The distribution to stockholders of the stock of a subsidiary held by a parent company. Usually the distribution is not taxable to the stockholders until the new shares have been sold. Compare
splitoff. See also
partial spinoff.
On December 8, 2006, the directors of Duke Energy approved a spinoff to Duke Energy shareholders of all the shares of wholly owned subsidiary Spectra Energy. Spectra Energy represented all of the assets and liabilities of Duke Energy's natural gas business, including distribution, transmission, storage, and gathering. Shareholders of Duke Energy would receive 0.5 shares of Spectra Energy common stock for each share of Duke Energy common stock held. For example, the owner of 300 shares of Duke Energy would receive 150 shares of Spectra Energy. Following the spinoff, Duke shareholders could sell or retain the Spectra Energy shares they had received. They also had the option of retaining their Spectra Energy stock and disposing of their Duke Energy shares. The spinoff allowed investors to have a direct investment in the specific industry. Separate shares of stock would also allow Spectra Energy management more flexibility in raising capital for expansion and acquisitions. The spinoff was tax-free to Duke Energy shareholders.