As previously announced, IBM (ticker: IBM) will distribute 80.1% of its Kyndryl shares to current IBM holders. Each IBM holder will receive one Kyndryl shares for each five IBM shares held as of the record date of Oct. 25. The distribution will be tax-free to IBM holders. Kyndryl will trade on the NYSE under the symbol KD.
IBM said it expects to exchange its remaining 19.9% stake in Kyndryl for outstanding IBM debt in the 12 months following completion of the distribution.
According to a recent IBM filing with the Securities and Exchange Commission about the spinoff, Kyndryl on a pro forma basis had 2020 revenue of $19.4 billion, down from $20.3 billion in 2019 and $21.8 billion in 2018. For the 2021 first half, revenue on a pro forma basis was $9.4 billion. Kyndryl had losses on a GAAP basis in both 2020 and the first half of 2021, but that includes one-time charges related to both workforce reduction and the spinoff. On a non-GAAP basis, Kynrdryl had pretax profits of $378 million in 2020 and $156 million in the first half of 2021.
IBM said that following the separation, the initial combined dividend level of Kyndryl and IBM is expected to be no less than IBM’s pre-spinoff dividend per share. IBM shares have a current dividend yield of 4.7%.
IBM noted in its announcement that its shareholders don’t need to take any action to receive the Kyndryl shares to which they are entitled.
IBM on Tuesday is off 1% to $140.95.