Summary
Automatic Data Processing, Inc. (ADP) has filed an 8-K report detailing a material definitive agreement for the separation and distribution of its brokerage services and securities clearing and outsourcing services businesses, which will operate under the newly formed Broadridge Financial Solutions, LLC (Broadridge). This transaction is structured as a spin-off, where ADP stockholders will receive shares of Broadridge common stock following Broadridge's conversion to a corporation. The agreement outlines the transfer of assets and liabilities between the two entities, the conditions precedent to the separation and distribution, and indemnification provisions. A key financial update is the reclassification of the Brokerage Services Group as discontinued operations in anticipation of the March 30, 2007 spin-off completion, with updated fiscal 2006 financial results reflecting this change.
Key Highlights
- 1ADP entered into a Separation and Distribution Agreement with Broadridge Financial Solutions, LLC for the spin-off of its brokerage services and securities clearing/outsourcing businesses.
- 2The transaction will result in ADP stockholders receiving shares of Broadridge common stock.
- 3Broadridge will become a separate, independent entity following its conversion from an LLC to a Delaware corporation.
- 4The agreement details the allocation of assets, liabilities, and contracts between ADP and Broadridge.
- 5Completion of the spin-off is subject to several conditions, including final board approval, SEC effectiveness of Broadridge's registration statement, and NYSE listing of Broadridge shares.
- 6ADP anticipates the spin-off will be tax-free to stockholders under Section 355 of the Internal Revenue Code, contingent on counsel opinions and IRS private letter rulings.
- 7ADP's fiscal 2006 results have been updated to reflect the Brokerage Services Group as discontinued operations in anticipation of the March 30, 2007 spin-off.