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Demerger


Also found in: Dictionary, Financial.

A demerger is a form of corporate restructuring in which the entity's business operations are segregated into one or more components.[1] 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.[1] 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.[2]

See also

  • Equity carve-out

References

  1. ^ a b Bryer, Lanning G. (2002). Intellectual property assets in mergers and acquisitions. John Wiley and Sons. pp. 12.2–12.3. ISBN 978-0-471-41437-7.
  2. ^ Krishna, K.L.; Uma Kapila (2009). Readings in Indian Agriculture and Industry. Academic Foundation. p. 599. ISBN 978-81-7188-734-7.

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