Bearish stock to watch: NetGear, Inc. (NASDAQ: NTGR)

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NetGear, Inc. (NASDAQ: NTGR) stock plunged 35.75% on 2nd January, 2018 (Source: Google finance) after the company completed its planned spinoff of Arlo Technologies. The company has completed its previously announced distribution of 62,500,000 shares of common stock of Arlo Technologies, Inc. owned by NETGEAR, representing approximately 84.2% of the outstanding shares of Arlo common stock. After the completion of the distribution, NetGear no longer owns any shares of Arlo common stock.

The distribution was made today to NETGEAR stockholders of record as of the close of business on the record date for the distribution, December 17, 2018. The distribution took place in the form of a pro rata common stock dividend to each NETGEAR stockholder of record on the record date. Based on the shares of NETGEAR common stock outstanding as of the record date, NETGEAR stockholders received 1.980295 shares of Arlo common stock for every share of NETGEAR common stock held as of the record date.

No fractional shares of Arlo common stock were distributed. Instead, NetGear stockholders will receive cash in lieu of any fraction of a share of Arlo common stock that they otherwise would have received. Deutsche Bank Securities acted as financial advisor to NETGEAR in connection with the distribution. Wachtell, Lipton, Rosen & Katz acted as legal advisor to NETGEAR in connection with the distribution.

Meanwhile, NetGear has announced the distribution ratio for the previously announced special stock dividend (the “distribution”) to the stockholders of its equity interest in Arlo Technologies, Inc. (NYSE: ARLO). Based on the shares of NETGEAR common stock outstanding as of December 17, 2018, the record date for the distribution, NETGEAR stockholders will receive 1.980295 shares of Arlo common stock for every share of NETGEAR common stock held as of the close of business on the record date.

Subject to certain customary conditions, the distribution by NETGEAR of the special stock dividend will be made on December 31, 2018 (the “distribution date”) in the form of a pro rata common stock dividend to all NETGEAR stockholders of record on the record date. No fractional shares of Arlo common stock will be distributed. Instead, NETGEAR stockholders will receive cash in lieu of any fraction of a share of Arlo common stock that they otherwise would have received. The distribution is generally intended to qualify as tax-free to NETGEAR stockholders for U.S. federal income tax purposes.

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