Tracking stock

Tracking stock, also known asletter stockandtargeted stock,is a specialized equity offering issued by a company that is based on the operations of a defined business within the larger organization (such as, for instance, a wholly ownedsubsidiaryof a diversified firm). Therefore, the tracking stock will be traded at a price related to the operations of the specific division of the company being "tracked". Tracking stock is typically limited, or has no voting rights.Often, tracking stock is issued to separate a high-growth (but initially, unprofitable) division from its parent company, while the parent company and its shareholders remain in control of the subsidiary's operations.
A tracking stock is issued from a corporation’s voting common stock as a special class of stock specifically tied to the financial performance of any type of definable business division, including a subsidiary, product line, or geographical territory. Stockholder benefits are confined to that division's earnings, and not to the larger company's overall performance. A parent company will retain a consolidated balance sheet and one board of directors, but issue separate income statements for its common stock and for its tracking stock. Reasons for issuing tracking stock may include attracting capital for atypicalmergers and acquisitions, or increasing stock options for key executives.
During thedot-com bubble, some companies that predated the bubble identified their Internet operations as high-growth divisions that would benefit from a tracking stock.  The best-known example isThe Walt Disney Company, which issued a tracking stock forgo.com.  At around the same time the bubble ended, Disney retired the tracking stock.AT&T(AWE) andSprint Corporation(PCS) also established tracking stocks for their cellular telephone operations, but neither of these tracking stocks is stilloutstanding.
Applerawas the successor company to what was previously the Life Sciences Division ofPerkinElmerCorporation. Applera was not publicly traded, but instead it consisted of two major groups which were publicly traded tracking stocks in the proteomics industrial sector. These two groups, formed in 1999, were the S&P 500 listed Applera Corp-Applied BiosystemsGroup and Applera Corp-Celera CorporationGenomics Group.The two entities shared corporate functions and intellectual property. They also shifted products as their separate strategies changed. For instance, in 2002, marketing and sales of the human genome database developed by Celera was transferred to Applied Biosystems, which had a more appropriate sales structure to monetize the database. This allowed Celera to focus on new pharmaceutical initiatives.   The two entities did not have separate boards, so the Applera board had to balance the interests of the separate shareholders.In 2008, Applera spun off Celera into an independent company, after which Applera changed its name to Applied Biosystems. A merger between Applied Biosystems andInvitrogenwas then finalized in 2008, creatingLife Technologies.Celera was acquired byQuest Diagnosticsin 2011,and Life Technologies was acquired byThermo Fisher Scientificin 2014.
Among other examples, in 1999Quantum Corp.issued tracking stock in two subsidiaries: its DLT and Storage Systems Group (DSS) and its Hard Disk Drive Group (HDD). Two years later, in 2001, Quantum sold the Hard Disk Drive business toMaxtorand redeemed the HDD tracking stock.
Qurate Retail Group(Nasdaq:QRTEAandQRTEBafter March 18, 2018 symbol changes from QVCA and QVCB) had tracking stocks for Liberty Entertainment—formerly LMDIA and LMDIB on Nasdaq, Liberty Capital—formerly LCAPA and LCAPB on Nasdaq, Liberty Starz—formerly LSTZA and LSTZB on Nasdaq, and Liberty Ventures (LVG)—formerly LVNTA and LVNTB on the Nasdaq) at various times since going public.  However, on September 23, 2011, Liberty Interactive—formerly LINTA and LINTB on Nasdaq—spun offLiberty Media(Liberty) as a separate company.  Therefore, no major U.S. companies had tracking stocks until August 9, 2012, when Liberty Interactive issued tracking stock for itself (LINTA/B) and LVG (LVNTA/B). LVG's tracking stock was fully-redeemed and retired after QVC Group split-off GCI Liberty on March 9, 2018.
Post separation from Qurate, Liberty (Nasdaq:FWONAandFWONKandOTCQB:FWONBafter January 23, 2017 symbol changes from LMCA, LMCB, and LMCK) has issued tracking stocks for Liberty Live Group (LLG) (Nasdaq:LLYVAandLLYVKandOTCQB:LLYVB), Liberty SiriusXM Group (LSG)—formerly LSXMA, LSXMB, and LSXMK on the Nasdaq, and Atlanta Braves Holdings (ABH) (Nasdaq:BATRAandBATRKandOTCQB:BATRB) at various times since going public.  In April 2016, Liberty reclassified its common stock into tracking stocks for itself (LMCA/B/K), Liberty Braves Group (LBG) (BATRA/B/K), and LSG (LSXMA/B/K). It spun off LBG as ABH under the same symbols on July 18, 2023, leaving only Liberty Formula One (LF1) and LSG. Liberty added LLG's tracking stock (LLYVA/B/K) on August 4, 2023.On 9 September 2024, Liberty merged LSG into the then-stub ofSirius XM Holdings Inc.(SXHI) to form a new independent SXHI, which continued using the symbolSIRIon the Nasdaq a day later.