Payroll and benefits outsourcing concern Automatic Data Processing Inc. will spin off its massive brokerage-services unit, an arm that observers project would have a market cap of more than $3 billion.
ADP said that as a result of the spin off -- which should be completed by the end of fiscal 2007 -- it expects to receive a distribution of $500 million to $700 million from the business in the form of a tax-free dividend.
ADP said that the decision to spin off the unit came following a yearlong strategic review. In that process the company mulled an initial public offering, as well as an outright sale of the business.
Although more well-known for its signature payroll unit, ADP's brokerage-services business both processes and clears trades of securities, along with handling the distribution of related materials such as proxy reports.
ADP's brokerage-services arm generated roughly $2 billion in revenue for its most recent fiscal year, accounting for about 20 percent of the company's overall revenue figure.
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