Tracking stock

Source: Wikipedia, the free encyclopedia.

Tracking stock, also known as letter stock and targeted stock,[1] is a specialized equity offering issued by a company that is based on the operations of a defined business within the larger organization (such as, for instance, a wholly owned subsidiary of a diversified firm). Therefore, the tracking stock will be traded at a price related to the operations of the specific division of the company being "tracked". Tracking stock is typically limited, or has no voting rights.[1] Often, tracking stock is issued to separate a high-growth (but initially, unprofitable) division from its parent company, while the parent company and its shareholders remain in control of the subsidiary's operations.

Overview

A tracking stock is issued from a corporation’s voting common stock as a special class of stock specifically tied to the financial performance of any type of definable business division, including a subsidiary, product line, or geographical territory. Stockholder benefits are confined to that division's earnings, and not to the larger company's overall performance. A parent company will retain a consolidated balance sheet and one board of directors, but issue separate income statements for its common stock and for its tracking stock. Reasons for issuing tracking stock may include attracting capital for atypical mergers and acquisitions, or increasing stock options for key executives.[2]

Examples

During the

outstanding
.

Life Technologies.[5] Celera was acquired by Quest Diagnostics in 2011,[6] and Life Technologies was acquired by Thermo Fisher Scientific
in 2014.

Liberty Media (NasdaqFWONA and FWONK and OTCQBFWONB after January 23, 2017 symbol changes from LMCA, LMCB, and LMCK) had tracking stocks for Qurate Retail Group (NasdaqQRTEA and QRTEB after March 18, 2018 symbol changes from QVCA and QVCB), Liberty Capital—formerly LCAPA and LCAPB on Nasdaq, Liberty Starz—formerly LSTZA and LSTZB on Nasdaq, and Liberty Entertainment—formerly LMDIA and LMDIB on Nasdaq, at various times since going public. However, on September 25, 2011, Liberty Capital and Liberty Starz could no longer be traded, leaving only Liberty Media and Liberty Interactive as separate companies. Therefore, no major U.S. companies had tracking stocks until August 9, 2012, when Liberty Interactive issued tracking stock for itself using the symbols LINTA and LINTB and Liberty Ventures—formerly LVNTA and LVNTB on the Nasdaq. Currently, Liberty Media has tracking stocks for Liberty Braves Group (NasdaqBATRA and BATRK and OTCQBBATRB), Liberty Formula One Group (first three symbols), and Liberty SiriusXM Group (NasdaqLSXMA, LSXMB, and LSXMK).[7]

Among other examples, in 1999

Quantum Corp. issued tracking stock in two subsidiaries: its DLT and Storage Systems Group (DSS) and its Hard Disk Drive Group (HDD). Two years later, in 2001, Quantum sold the Hard Disk Drive business to Maxtor
and redeemed the HDD tracking stock.

See also

References

  1. ^ a b "SEC page on tracking stock". Archived from the original on November 7, 2020. Retrieved February 21, 2021.
  2. ^ BANHAM, Russ (July 1, 1999). "Track Stars". journalofaccountancy.com. Journal of Accountancy. Retrieved September 1, 2021.
  3. ^ Human genome race tweaked by Celera's stock offer Archived October 12, 2016, at the Wayback Machine, Forbes, Published: April 29, 1999
  4. ^ Sequencer of Genome to Change Focus, New York Times, By ANDREW POLLACK, Published: April 22, 2002
  5. ^ "Applera, Form 8-K, Current Report, Filing Date Oct 15, 2008" (PDF). secdatabase.com. Archived (PDF) from the original on April 7, 2014. Retrieved January 12, 2013.
  6. ^ https://www.celera.com/celera/pr_1305673632 Archived 2011-07-09 at the Wayback Machine Quest Diagnostics Successfully Completes Acquisition of Celera, May 17, 2011.
  7. ^ "Liberty SiriusXM Group". Liberty Media Corporation. Retrieved December 31, 2022.

External links