This paper evaluates the conjecture that excess stock returns that hav
e been documented around the announcement of corporate spin-offs repre
sent, at least in part, the re-creation of value destroyed at the time
of an earlier acquisition. We evaluate this question with a sample of
spin-offs that originated as earlier acquisitions. At the time of the
original acquisition, on average, announcement period returns to the
bidder and the combined bidder and target firm are negative and signif
icant. Additionally, announcement period returns at the time of the sp
in-off are negatively and significantly correlated with acquisition an
nouncement period returns.