The Case Studv Of The Spin-off Of Kingsoft’s Subsidiary

Spin-offs are a way for diversified companies to return to specialization by streamlining and dividing their subsidiaries.The introduction of STAR Market and the pilot registration system have facilitated many conditions for companies wishing to divest in China.In addition to domestic spin-offs,there are also many companies that choose to spin off their subsidiaries outside of China.With the continuous improvement of the relevant system,spin-offs have received more and more attention and become a hot concept in the capital market at this stage,therefore,it is important to study the motivation of spin-offs and the impact of spin-offs on companies.The fact that Kingsoft has spun off its subsidiaries and listed them in different capital markets both domestically and internationally is of great significance to other large enterprises that plan to spin off their subsidiaries in succession.Based on information asymmetry theory,enterprise life cycle theory and divestiture gain theory,this paper analyzes the motivation of Kingsoft’s successive spin-offs of Kingsoft Office Software and Kingsoft Cloud,and finds that,based on the Group’s established spin-off strategy,Kingsoft Office Software’s motivation is to seize the opportunity of listing on the STAR Market and reduce information asymmetry,while Kingsoft Cloud’s motivation is to obtain higher valuation and relieve capital pressure in order to seize industry development opportunities.This paper adopts literature research,case studies,and case studies.This paper uses literature research,case studies,and event studies to analyze the short-and long-term economic consequences of Kingsoft’s successive spin-offs.In terms of short-term market reactions,as Kingsoft Office is a high-quality asset,the spin-off generates negative market reactions to the parent company Kingsoft.After the spin-off of Kingsoft Cloud,on the other hand,the market has expectations for Kingsoft Cloud,and on the other hand,it reduces the burden of losses for Kingsoft,so the parent company Kingsoft generates positive market reactions.From the medium and long-term economic consequences of the spin-off,the revenue structure of the parent company Kingsoft is optimized,the quality of revenue is improved and the profitability continues to grow.Kingsoft Office gains sufficient R&D capital to improve its main business and accelerate its strategic transformation from office software to enterprise-class services.Kingsoft Cloud raised capital to shape the core competitiveness of vertical areas and enhance corporate growth.The spin-off has had a positive impact on Kingsoft Group and has played an important role in enhancing corporate value and long-term sustainable development.After sorting out the whole event of Kingsoft Group’s successive spin-offs,this paper concludes with a summary of the case study to provide insights for other companies to choose spin-offs for strategic adjustments.