The Domain Holdings Australia Limited (ASX: DHG) spin off certainly generated a lot of news and excitement.
But was the move good for Fairfax Media Limited (ASX: FXJ) shareholders?
The Fairfax share price closed on Wednesday at $1.06 but by the end of Thursday Fairfax shares were trading at 73 cents, tumbling by about 31%.
The Domain share price closed at $3.69.
It was certainly no surprise that the Fairfax share price would suffer by cutting off Domain's umbilical cord.
The main question for shareholders was always going to be: is this going to cost us?
That should be balanced against another question: did the spin off-plan make adequate allowance to cushion the blow to the Fairfax share price?
Fairfax shareholders received one Domain share for every 10 Fairfax shares held prior to the spin off.
So let's see how this translates in dollar terms.
A person who held 100 Fairfax shares at the end of Thursday could equate their direct holdings in the media company to the value of $73.
In addition to that, this shareholder would have received 10 Domain shares which would be worth $36.90, bringing the value of their holdings in Fairfax and Domain combined to a total of $109.90.
So was our Fairfax shareholder better off before or after the spin off?
The answer to that question depends on which point in time we use as a reference.
For instance, our hypothetical Fairfax shareholder's stock was worth about $106 on Wednesday and by the time the market closed on Thursday their stock holdings in Domain and Fairfax together had gone up by about $3.90.
But if they sold their stock in June, when Fairfax shares were trading at around $1.26, our Fairfax shareholder would have been much better off.
Essentially there is no definitive answer as time will tell.
However, we can see from companies that have cashed in on the lucrative internet advertising space that Domain has great potential.
REA Group Limited (ASX: REA), which owns realestate.com.au, has seen its share price rise by more than 50% in the past year.
And shareholders of Carsales.Com Ltd (ASX: CAR) and SEEK Limited (ASX: SEK) have enjoyed gains exceeding 30% over the past year.
As such, our hypothetical Fairfax shareholder should not be feeling too disappointed for missing the opportunity to jump ship in June.
So far, it seems the spin off has gone reasonably well for Fairfax and its shareholders.
