SunEdison Update – News of a “Spin-Off” Premature (Or Inaccurate), But SunEdison Is Selling A Piece Of Its Semiconductor Business Through An IPO


IPO filing shows that SunEdison will maintain significant ownership as it sells a portion of its semiconductor business.

SunEdison is the business of manufacturing semiconductors and solar panels and developing solar power plants.

On August 22, we discussed the journalistic frenzy regarding the “spin-off” of the semiconductor business after SunEdison announced a partial sale and separation of the businesses.  As we mentioned at the time,

“However, SunEdison’s press release only mentions a sale of part of the semiconductor business.  It says nothing about sending any part of the remaining shares in the semiconductor company to shareholders.”

SunEdison Semiconductor made its initial IPO filing with the SEC.  It is still in its preliminary form, but the basic outline of the post-IPO corporate structure is described.

Not to get to semantic, but selling a small portion of your business and retaining the rest is not a “spin-off.”  A “spin-off” refers to the distribution of a subsidiary to the parent company’s shareholders.  In some cases, it can be a distribution of the remaining part of the subsidiary after an IPO or other sale of part of the subsidiary.

The SunEdison Semiconductor, Inc. IPO is basically an asset sale for SunEdison.  The asset is a portion of the company formed to hold the semiconductor business.

In this case, there is not much of an indication that SunEdison is interested in completely divorcing itself from the semiconductor business.  As noted in the IPO filing, it will retain more than a majority of the subsidiary:

“For purposes of                               [Ed:  Stock exchange, which has not been determined at the time of filing.] rules, we expect to be a “controlled company” after completion of this offering. Controlled companies under those rules are companies of which more than 50% of the voting power for the election of directors is held by an individual, a group or another company. SunEdison will continue to control more than 50% of our common stock upon completion of this offering and will continue to have the right to designate a majority of the members of our board of directors for nomination for election and the voting power to elect such directors following this offering.”

As you may recall from our previous post, semiconductors still contribute substantially to the SunEdison family.  We’re sure SunEdison appreciates the block of cash it will get from the IPO, but it does not seem to be interested in a spin-off at this point.

We’ve opted for the more recent ode to spin-offs, or arounds. We relate more to Flo Rida than Dead or Alive, as the video is a pretty accurate depiction of our life outside the compound.

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