demerger


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De-Merger

A situation in which a company sells one or more of its subsidiaries. Shareholders in the original company are usually given the same proportion of shares in the newly independent company. See also: Spin-off, Divestiture.

demerger

the break-up of a company, often originally formed through a MERGER, into two (or more) separate companies. This is most easily achieved when the original businesses comprising the merger have continued to be run as separate divisions of the enlarged group. In this case, for example, the A-B company could be split into separate quoted companies, A and B, with the company's existing shareholders being given shares in both companies. Thus, unlike a DIVESTMENT (the sale of a division to outside interests) or a MANAGEMENT BUY-OUT (the sale of a division to its existing management), initially at least the companies continue to be owned by their existing shareholders.

A demerger may occur because the merged company has failed to perform up to expectations because of internal conflicts of management, or may result from a rethink of the company's BUSINESS STRATEGY favouring a concentration on ‘core’ businesses.

References in periodicals archive ?
CAIRO: Orascom Construction Industries (OCI) said it is planning a demerger of its construction business from its fertilizer venture, according to a statement.
according to the provisions of article 2505 of Italian Civil Code, the demerger will be executed in simplified form and the resolution authorizing the demerger will be approved by the Boards of Directors of the two companies.
Corbett, who resigned as Railtrack chief executive in November, had been expected to stay at Woolworths after their demerger from Kingfisher next month.
As previously announced, and assuming the necessary preconditions are fulfilled, including an affirmative vote of the Elan shareholders at the EGM, the Prothena business which comprises a substantial portion of Elan's drug discovery business platform, will be separated into another company by way of a demerger.
After the Demerger and Mondi Limited Consolidation, Mondi Limited Shareholders will hold new Mondi Limited ordinary shares ("New Mondi Limited Ordinary Shares") as well as the newly listed Mpact Shares.
The demerger would leave Punch with around 5,200 leased and tenanted pubs, which the company expects to reduce to around 3,000 through disposals.
Would the demerger not fail, if there was no suitable arrangement?
Mr Dunstone said: "We are now close to finalising separate banking facilities for Best Buy Europe, which enables us to be confident of completing our demerger process at the latest by July 2010.
The demerger decision came as Carphone announced a "significant improvement" in performance at its TalkTalk broadband business, which increased customer numbers by 74,000 in the fourth quarter.
A year after a demerger, manufacturing industry parents achieve a 38 per cent premium to share price, while TMT parent companies achieve 29 per cent.
When the demerger is finalised, Roger Cart, who has been on the Cadbury Schweppes board for seven years, will become chairman of Cadbury plc.
The London-based company said the demerger move would allow both divisions to benefit from increased focus on their respective strategies.