Corteva shows an 83% drop, but it is the Vylor spin-off: one share of each is worth $83.60 vs. $77.65

Corteva completed its split into two public companies on Thursday, spinning off its seed business as Vylor Inc., which began regular trading on the New York Stock Exchange under the symbol VYLR, according to a Form 8-K filed this morning. Corteva keeps the crop protection business.

The first thing many investors will see is a red number. At 9:57 a.m., Nasdaq showed Corteva at $12.75, down $64.90 or 83.6% from Wednesday's close of $77.65, on volume of more than 12 million shares, against a daily average of about 4.7 million.

The 83% drop that is not a drop

Wednesday's $77.65 was the price of Corteva with the seed business attached. Holders of record on Sept. 24 received one share of Vylor for every Corteva share, the company said in a Sept. 15 filing. So the fair comparison is the two shares together:

That gain depends heavily on where Vylor trades, and Vylor is swinging. It has no regular-way prior close yet, and in its first half hour it ranged from $65.00 to $72.17. At the $65.00 low, the pair would have been worth $77.75, roughly where Corteva closed. Treat the 7.7% as a snapshot, not a verdict.

The split also shows how the market values the two halves. Nasdaq puts Corteva's new market value at about $8.5 billion. Because the distribution was one for one, Vylor should have about the same number of shares, which at $70.85 implies roughly $47 billion, by our arithmetic. Investors are valuing the seed business at more than five times the crop protection business that kept the Corteva name.

Who should check their account today

• Anyone with a stop order on CTVA. A stop-loss set against the old price could have been triggered by the mechanical drop at the open unless the broker adjusted it for the distribution, so it is worth confirming what happened to any open order.
• Fund holders. Funds that owned Corteva on the record date received Vylor shares as well, so an index or sector fund's holdings will look different this week. Index providers decide separately whether Vylor stays in their benchmarks.
• Taxpayers. The spin-off is intended to be tax-free, according to the Sept. 15 filing, but the original Corteva cost basis now has to be split between the two stocks. Companies typically publish that allocation on IRS Form 8937 after the distribution; until then, a basis shown for CTVA may be wrong.

The California fight that nearly delayed it

The split went ahead after a late legal challenge. The State of California sought a temporary restraining order and preliminary injunction to delay the separation. On Sept. 30, the U.S. Court of Appeals for the Fourth Circuit summarily reversed a district court order that had denied California leave to file that motion and sent it back, expressing no view on the merits, Corteva said in an 8-K filed Thursday. On remand, the district court denied California's motion to block the separation.

The same filing shows how far the board was prepared to go. Effective Sept. 30, Corteva's directors waived the condition that no injunction be in effect, to the extent it would fail solely because of a potential court order blocking the distribution. The filing does not say what California's objection was, and we have not seen the state's motion.

Corteva also said in a separate filing that Vylor's exchange of debt issued by Corteva's subsidiary EIDP into new Vylor notes is set to settle alongside the separation.

Sources: Corteva Forms 8-K on SEC EDGAR (Sept. 15, Oct. 1, court ruling, Oct. 1, completion, Oct. 1, exchange offers); Nasdaq quotes for CTVA and VYLR. Prices are intraday and will change. This is market information, not investment or tax advice.