If a company has 1,000 shares outstanding, and you own 10 shares, it means you own 1% of the company. If a new entity is spun off, and 100 shares are issued, you'll be allocated just 1 share - your 1%.
The company may wish to spin off the new entity with 100 shares (instead of 1,000 shares) because if they are both valued equally, your 1 share in the new entity will be worth 10x what it was in the old one. Each share being worth much more is attractive to investors and exchanges for various reasons.
ISX Price at posting:
$1.07 Sentiment: Buy Disclosure: Held
