Mario Gabelli’s GAMCO Investors announced the spin-off of Gabelli Securities Group (GSG) into an independent, publicly owned company.
GSG is composed of GAMCO’s alternative management business and institutional research services business. According to GAMCO, it will have $46.5 billion in assets under management (AUM) and GSG will have $1 billion AUM after the spinoff.
Spin-off allows GAMCO & GSG tailor strategic plans & growth opportunities
In a regulatory filing, GAMCO explained that separating GSG as independent and publicly owned company is in the best interest of both firms.
The spin-off would allow GAMCO and GSG to tailor strategic plans and growth opportunities. Both firms will be able to raise and allocate resources efficiently including capital raised through debt or equity offerings.
The spin-off would also provide flexibility for GAMCO and GSG to use its own stock as currency for teammate incentive compensation, potential acquisitions, and targeted investment opportunity.
GSG common stock distribution
According to GAMCO, its investors will receive one share of GSG class A common stock each GAMCO class A common stock they own at the time of the spin-off.
They will receive one share of GSG Class B common stock for every GAMCO class B common stock they own.
“We intend for the distribution of GSG common stock in the spin-off to be tax-free for our stockholders. It is a condition of completing the spinoff that we receive an opinion of counsel that a distribution of GSG common to GAMCO stockholders will qualify as a tax-free distribution for United States income tax purposes,” according GAMCO.
The investment management firm also indicated in the filing that its stockholders will receive information to assist them in calculating their tax bases in the GAMCO and GSG common stock in due course. The timing of the spin-off is still uncertain.
GAMCO will continue to trade its stock on the New York Stock Exchange (NYSE) under the symbol “GBL.” GSG intends to trade on the NYSE. The firm is yet to determine its ticker symbol.
Mario Gabelli and his affiliates will control approximately 95% of the voting power and around 73% of the outstanding shares of GSG common stock following the completion of the spin-off.