De-Merger

AAA

DEFINITION of 'De-Merger'

A business strategy in which a single business is broken into components, either to operate on their own, to be sold or to be dissolved. A de-merger allows a large company, such as a conglomerate, to split off its various brands to invite or prevent an acquisition, to raise capital by selling off components that are no longer part of the business's core product line, or to create separate legal entities to handle different operations.

INVESTOPEDIA EXPLAINS 'De-Merger'

For example, in 2001, British Telecom conducted a de-merger of its mobile phone operations, BT Wireless, in an attempt to boost the performance of its stock. British Telecom took this action because it was struggling under high debt levels from the wireless venture. Another example would be a utility that separates its business into two components: one to manage the utility's infrastructure assets and another to manage the delivery of energy to consumers.

RELATED TERMS
  1. Takeover

    A corporate action where an acquiring company makes a bid for ...
  2. Dissenters' Rights

    State legislation that allows shareholders of a corporation the ...
  3. Acquisition

    A corporate action in which a company buys most, if not all, ...
  4. Hostile Takeover

    The acquisition of one company (called the target company) by ...
  5. Forward Triangular Merger

    The acquisition of a target company by a subsidiary of the purchasing ...
  6. Merger

    The combining of two or more companies, generally by offering ...
Related Articles
  1. Mergers And Acquisitions: Understanding ...
    Fundamental Analysis

    Mergers And Acquisitions: Understanding ...

  2. Analyzing An Acquisition Announcement
    Investing Basics

    Analyzing An Acquisition Announcement

  3. Cashing In On Corporate Restructuring
    Bonds & Fixed Income

    Cashing In On Corporate Restructuring

  4. Owners Can Be Deal Killers In M&A
    Options & Futures

    Owners Can Be Deal Killers In M&A

comments powered by Disqus
Hot Definitions
  1. Last In, First Out - LIFO

    An asset-management and valuation method that assumes that assets produced or acquired last are the ones that are used, sold ...
  2. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  3. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  4. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  5. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  6. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
Trading Center