What is a corporate spin-off?

If a corporate ‘spin-off’ happens, it means that a parent company turns one of their divisions into an independent company. They do this by selling or distributing new shares (divestement).

What happens in a spin-off?
In the case of a spin-off, part of the original shares are converted into shares of the new, spun-off company. As a shareholder you don’t have to do anything if a spin-off happens.

Examples of spin-off's
Big companies often turn departments into independent companies. For example, Signify and ASML used to be part of Philips, and Pay-Pal spun-off from e-Bay in 2015. The shareholders automatically got a few shares (based on the number of shares they held with the parent company) of these new companies in their portfolio.