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Our Favorite Spin-off Stories Since 2000
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The definition of a corporate spin-off is rather straightforward: A company decides to separate a part of its operations and distributes the shares of this business to its shareholders. However, the rationale behind a spin-off is far more complex, ranging from financial or regulatory drivers to differing strategic priorities. Join us as we present some of the most notable spin-offs since 2000 and discuss the motives for these separations.
Our Top Spin-off Success Stories Since 2000, Listed by Size:
AbbVie $332B
Ferrari $93B
Moody’s $85B
PayPal $82B
GE Vernova $76B
Kraft Foods (now Kraft Heinz) $42B
GE HealthCare $41B
Fortive $26B
PayPal
Market cap when spun off: $49 billion
Current market cap: $82 billion
Parent company: eBay
Spin-off year: 2015
PayPal was founded in 1998 by Max Levchin, Peter Thiel, and Luke Nosiek as Confinity and quickly gained attention during the Dot Com Boom era for its digital payment solutions. Following a merger with Elon Musk's X.com, the company rebranded as PayPal and went public in 2002. Shortly after, eBay acquired PayPal for approximately $1.5 billion, becoming eBay’s preferred payment platform. After more than a decade of mutual benefit, PayPal and eBay parted ways in 2015 when PayPal was spun off to eBay’s shareholders. The move was advocated by activist investor Carl Icahn, who asserted: “PayPal’s a jewel and eBay is covering up its value. If you just went out and took it public you’d get a huge premium because of growth.”
Since the spin-off, PayPal has experienced significant business growth, driven by successful acquisitions of Honey, iZettle, but primarily Venmo. While PayPal’s core offering remains its digital payment system, the company has expanded into services like credit options, investment products, and business tools.
Further reading: The PayPal Story: Online Payment Pioneers
Kraft Foods (now Kraft Heinz)
Market cap when spun off: $46 billion
Market cap: $42 billion
Parent company: Altria Group
Spin-off year: 2007
The intricate M&A history of Kraft and Altria started in the 1980s when Altria acquired General Foods Corp. and Kraft Foods Inc. Over the next two decades, the division expanded, becoming one of the world’s largest food companies.
In 2007, Altria began consolidating its business with the first major move being the spin-off of Kraft Foods. This allowed the two companies to focus on their individual businesses more effectively and flexibly. For the parent company, Altria, it marked the beginning of a broader strategy to better navigate the complexities of its domestic operations, which we will explain later.
For Kraft Foods, the spin-off from Altria was followed by a significant restructuring in 2012 that split the company into two separate entities. In the shake-up, Kraft Foods Group was spun off Kraft Foods, with the latter changing its name to Mondelez International. Mondelez inherited the international brands and market presence with better growth opportunities, while Kraft Foods Group would focus on the more stable and slowly growing North American grocery business.
Capping off some intense years of transformation, Kraft Foods Group merged with H.J. Heinz Company in 2015. The move, orchestrated by 3G Capital and Berkshire Hathaway, created The Kraft Heinz Company.
Further reading: The Consumer Goods Sector: Housing the World’s Most Known Brands
Philip Morris International
Market cap when spun off: $108 billion
Market cap: $202 billion
Parent company: Altria Group
Spin-off year: 2008
After successfully separating with Kraft, the largest remaining part of Altria was its tobacco business, under the Philip Morris brand. Just a year later, in 2008, Altria continued its consolidation efforts, separating its domestic and international tobacco business, by spinning off Philip Morris International (PMI).
The rationale behind the spin-off was that the two divisions were exposed to vast differences in terms of market challenges and opportunities. PMI got to pursue growth opportunities in emerging markets with fewer regulatory restrictions, while the remaining PM USA faced the strict U.S. regulatory environment and litigation risks related to tobacco use.
Further reading: The Rise of ZYN: Redefining Nicotine Consumption
AbbVie
Market cap when spun off: $56 billion
Market cap: $332 billion
Parent company: Abbott Laboratories
Spin-off year: 2013
In 2013, Abbott Laboratories decided to split its diversified healthcare business into two independent companies after both internal and external pressure. The parent company, Abbott Laboratories, focused on consistent, diversified healthcare products, while spin-off AbbVie concentrated on pharmaceuticals and innovation. AbbVie also took over the blockbuster drug Humira, which treated autoimmune diseases and became one of the world's best-selling drugs.
AbbVie began trading with a valuation of approximately $50 billion. With a looming patent expiration for Humira, which accounted for about half of AbbVie’s revenue, the spin-off entity was initially viewed as a riskier investment compared to its more stable parent. However, AbbVie became a success in its own right, leveraging a strong pipeline and expanding its portfolio. Over the past decade, its market cap has surged sevenfold, rising to around $350 billion since its 2013 separation from Abbott Laboratories.
Fortive
Market cap when spun off: $17 billion
Market cap: $26 billion
Parent company: Danaher
Spin-off year: 2016
Danaher Corporation is widely recognized for its life sciences and diagnostics business as well as its history of strategic acquisitions and spin-offs. One of its most significant spin-offs occurred in 2016 when Danaher separated its industrial businesses into a new company, Fortive Corporation. This move included operations in instrumentation, transportation, and industrial technologies, allowing Danaher to sharpen its focus on healthcare and life sciences.
Other notable spin-offs from Danaher include Envista in 2019, specializing in dental products and technologies, and Veralto, in 2023, focusing on environmental and water quality solutions.
Further reading: Danaher Business System and Acquisition History
Ferrari
Market cap when spun off: $9 billion
Market cap: $93 billion
Parent company: Fiat Chrysler Automobiles (FCA)
Spin-off year: 2016
In 2016, Ferrari N.V. was spun-off from Fiat Chrysler Automobiles (FCA) in a strategic move to separate Ferrari’s luxury and performance car business from FCA’s mass-market automotive brands such as Jeep, Chrysler, and Fiat. Before the separation, FCA had been struggling financially, with many suggesting that the spin-off was primarily focused on unlocking value. The decision allowed Ferrari to position itself purely as a luxury brand, leveraging its exclusive sports cars and Formula 1 heritage to thrive independently.
Following the spin-off, FCA later merged with Groupe PSA in 2021, forming Stellantis, one of the world’s largest automakers. Meanwhile, Ferrari has certainly accelerated since leaving its parent, with its stock rising 10x since the separation, bringing its market capitalization to over $90 billion–ironically, more than double that of Stellantis.
Further reading: Pricing Power Through Scarcity: A Case Study of Ferrari
Moody’s Corporation
Market cap when spun off: $5 billion
Market cap: $85 billion
Parent company: Dun & Bradstreet
Spin-off year: 2000
The background to the venerable Moody’s dates back to 1900, when John Moody published the first draft of what would become modern bond credit ratings. After operating independently for over half a century, Moody’s was acquired by Dun & Bradstreet in 1962. Despite both companies being involved in credit reporting, they functioned separately. By the late 1990s, pressure mounted on the parent company to separate the two businesses due to Moody’s clear outperformance. In 2000, Moody’s was spun off, becoming a publicly traded company on the New York Stock Exchange.
Looking back, the outperformance of the spin-off has undeniably continued. Moody sits at a market cap of around $86 billion while parent company Dun & Bradstreet has a valuation of $5 billion.
GE HealthCare & GE Vernova
Market cap when spun off: $28 billion + $38 billion
Market cap: $41 billion + $76 billion
Parent company: General Electric (now GE Aerospace)
Spin-off year: 2023 & 2024
General Electric (GE) was founded in the late 19th century, with its origins rooted in Thomas Edison’s businesses. Throughout its long history, the conglomerate has both witnessed and contributed to significant milestones in American technological evolution. In 2021, GE announced one of the largest corporate separations ever, unveiling plans to split its diverse operations into three publicly traded companies by spinning off two of these businesses.
By breaking into three separate companies, GE aimed to give each unit the ability to focus on its core market, optimize capital allocation, and increase strategic flexibility. The two-step spin-off resulted in the creation of three industry-leading global companies: GE HealthCare, spun off in 2023, comprising GE’s medical technology and diagnostics business; GE Vernova, spun off in 2024, comprised of GE’s energy businesses; and GE Aerospace, focusing on jet engines and aviation technologies.
Closing Thoughts
While creating shareholder value is the primary rationale behind most spin-offs, there can be other motivations, such as focusing on core businesses, regulatory reasons, or tax considerations. But typically, the ultimate goal is aligned with maximizing long-term shareholder returns. By separating distinct different units, companies can streamline operations, sharpen focus, and allocate resources more effectively.
Further reading: World Leading Conglomerates Built on Mergers & Acquisitions
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