Latham & Watkins helps execute successful spin-offs by providing a multi-disciplinary combination of initial public offerings (IPOs), mergers and acquisitions (M&A), tax, finance, and intellectual property legal advice.
Spin-offs are complex IPOs with a sophisticated tax overlay in which the proceeds are often used as an alternative financing mechanism to optimize the parent company’s balance sheet and capital structure. Latham’s leadership in the IPO market, combined with our premier Transactional Tax Practice, collaborate with our M&A expertise to provide clients the practical advice necessary to navigate the spin-off process successfully.
Latham leverages a powerful combination of insight, experience, and practical knowledge to help clients unlock share value in a spin-off with advice on the key threads in the transaction, including:
- Understanding and articulating the pre-spin levels of integration and the expected post-closing relationship between the two companies
- Designing an optimal tax and legal structure to separate the businesses
- Navigating the regulatory process to take the SpinCo public
- Creating an ideal capital structure and balance sheet for the ParentCo and SpinCo
- Preparing the SpinCo to become a stand-alone publicly traded company
Share value can erode if appropriate legal components are not addressed by experienced counsel during the separation and distribution process. Latham helps navigate the spin by advising on the following legal and business issues:
- Going public and capital raising
- Creating optimal tax structures
- Navigating regulation, shareholder communication and board fiduciary duties
- Interacting with activist investors
- Protecting IP assets
- Negotiating commercial and joint venture agreements
- Ensuring data privacy and security
- Implementing benefits, compensation & employment strategies
- Addressing antitrust and regulatory approvals
Beyond the Spin-off – M&A Alternatives
Reverse Morris Trust Transactions
Latham has extensive experience in structuring various post-spin M&A transactions to preserve the tax-free treatment of the spin, including integrated post-spin M&A transactions such as Morris Trust and Reverse Morris Trust transactions.
The Dual Track Process
Latham is also experienced in advising on “dual-track” processes, whether in the context of spin-off transactions or IPOs. Latham M&A and Capital Markets lawyers work seamlessly to plan and execute the dual-track process on multiple fronts and are experienced in advising clients’ management teams and board of directors on the available alternatives, legal risks, and considerations.
- Tax-free spin-off by Yates Petroleum Corporation of Agave Energy Company
- Merger between Entercom Communications and CBS Radio via a Reverse Morris Trust transaction
- Tax-free spin-off of the United States Public Sector business of DXC Technology
- Tax-free spin-off of the Powertrain Systems Segment of Delphi Automotive to its shareholders
- Tax-free spin-off by Archrock, Inc. of Exterran Corporation to its shareholders
- Acquisition by LogMeIn of the GoTo business of Citrix Systems via a Reverse Morris Trust transaction
- Tax-free spin-off by Demand Media to its shareholders of Rightside Group
- Sale of Safeway to a consortium led by Cerberus Capital Management and Albertsons, and a spin-off of Safeway’s subsidiary, Blackhawk Network Holdings
- Tax-free spin-off by Integra LifeSciences of SeaSpine
- Sale by Starwood Hotels & Resorts Worldwide of Vistana Signature Experience to Interval Leisure Group via a Reverse Morris Trust transaction