![]() And so what we're doing is we're putting in some cash and we're using the shares of the spin-off as partial payment. Usually, it's (a spin out) an opportunity to buy a very significant company, one that we couldn't justify if we were buying it for cash. This is what Mark Miller said during the last Annual General Meeting: Constellation typically makes acquisitions with cash on hand, but it sometimes makes sense to use shares or debt as a payment. Lumine could incur significant debt or cash to purchase WideOrbit without needing to issue shares, but the acquisition's size is significant to justify a spin-out. The first reason is that Constellation will use a portion of Lumine's shares to acquire another company (WideOrbit). Why is Constellation spinning out Lumine?Ĭonstellation is spinning out Lumine for several reasons, but we'll focus on two. Without further ado, let's go over the reason for the spin-out. If you want to read Lumine's preliminary prospectus, you can do so here, but we advise you it's more than 100 pages long. ![]() ![]() This article should help you grasp everything you need to know about the transaction to make an informed decision on whether to hold, sell or maybe incorporate Lumine to your portfolio. This is a relevant event for Constellation's shareholders and there's quite a bit of detail to go through. Spin-outs are becoming somewhat recurring for the company, bringing quite a good deal of messy accounting but arguably quite a good deal of value creation too. This might sound familiar because it's the second time in the past two years that Constellation has spun out one of its subsidiaries, with the first being TSS. Constellation Software ( OTCPK:CNSWF) ( TSX: CSU:CA) recently announced that it would spin out Lumine to be traded as a separate public entity.
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