The tax bill for a spinoff is reportedly less than the tax bill for an outright sale.
As would-be buyers eye a chance to bid on Valero Energy Corp.’s Corner Store chain, after it was announced the company plans to divest the stores, San Antonio Business Journal has reported that Valero could instead opt to spin off the retail chain.
“The company is currently reviewing several potential separation transactions, including a tax-efficient distribution of the retail business to Valero shareholders,” officials told San Antonio Business Journal. By “tax-efficient distribution,” they meant spinning off Valero’s retail business rather than divesting the stores to a third party. The tax bill for a spinoff is reportedly less than the tax bill for an outright sale.
“We’re exploring options, so that would include all the options,” Valero spokesman Bill Day said in an interview with San Antonio Business Journal. “There are certain tax advantages to Valero to do a spinoff to our shareholders rather than a sale to an outside entity. So that tax advantage would have to be surmounted if another company were to come and make an offer.”