Gap (GPS) Stock Surges On Spin Off Speculation

The Gap Inc (GPS) is today’s Under 30-stock. In this segment Jenny Horne and Alex Coffey discuss the surge in Gap (GPS) stock today with George Tsilis. George talks about what’s driving that surge which is speculation that Gap Inc (GPS) could split off its more successful brands in the company, specifically Athleta and Old Navy. Alex asks George to explain how splitting apart a company unlocks value if it’s still the same brand, same asset and the same overall value. George explains that when a company spins off into smaller companies, its capital structure composition changes. George says a company can spin off its good parts and leave the bad parts saddled with the debt and that basically results in a debt restructuring situation.