A demerger is a form of corporate restructuring in which the entity's
business operations are segregated into one or more components.
It is the converse of a
merger or acquisition.
A demerger can take place through a
spin-off by distributed or transferring the shares in a subsidiary holding the business to company shareholders carrying out the demerger. The demerger can also occur by transferring the relevant business to a new company or business to which then that company's shareholders are issued shares of.
In contrast,
divestment can also "undo" a merger or acquisition, but the assets are sold off rather than retained under a renamed corporate entity.
Demergers can be undertaken for various business and non-business reasons, such as
government intervention, by way of
antitrust law, or through
decartelization.
See also
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Equity carve-out Equity carve-out (ECO), also known as a ''split-off IPO'' or a ''partial spin-off'', is a type of corporate reorganization, in which a company creates a new subsidiary and subsequently IPOs it, while retaining management control. Only part of th ...
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Successor company
References
Corporate finance
Restructuring
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