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That’s when a company creates a new independent company by selling or distributing new shares of its existing business, this is a type of divestiture. A company creates a spinoff expecting that it will be worth more as an independent entity. A spinoff is also known as a spinout or starburst. When a stock spinoff happens, then stockholders / shareholders would be offered the opportunity of owning shares in both the spin-off and the parent company proportional to each other. It is important how you record the individual stock price on the day you acquire it.