Examples
Verizon wished to sell its access lines to Fairpoint. Rather than simply selling these assets alone to Fairpoint, however, Verizon created a subsidiary (to which it sold these assets) and distributed the shares of this new subsidiary to Verizon's shareholders. They then completed a Reverse Morris Trust with Fairpoint, where the original Verizon shareholders had a majority ownership of the newly merged company and the Fairpoint management ran the new company. Verizon was able to divest their access lines in a tax free manner as they continued to focus on higher growth wireless business.
Procter & Gamble Co. was planning to sell its Pringles line of snacks to Diamond Foods in a leveraged, reverse Morris Trust split-off. The Pringles business would be transferred to a separate subsidiary which would assume approximately $850 million of debt. However, the two companies were unable to finalize the deal, and in February 2012 Procter & Gamble found another buyer in the Kellogg Company.
Procter & Gamble used a similar transaction structure when it sold Folgers coffee to J.M. Smucker in 2008.
Read more about this topic: Reverse Morris Trust
Famous quotes containing the word examples:
“There are many examples of women that have excelled in learning, and even in war, but this is no reason we should bring ‘em all up to Latin and Greek or else military discipline, instead of needle-work and housewifry.”
—Bernard Mandeville (1670–1733)
“No rules exist, and examples are simply life-savers answering the appeals of rules making vain attempts to exist.”
—André Breton (1896–1966)
“It is hardly to be believed how spiritual reflections when mixed with a little physics can hold people’s attention and give them a livelier idea of God than do the often ill-applied examples of his wrath.”
—G.C. (Georg Christoph)