divestment

(redirected from divest)
Also found in: Dictionary, Thesaurus, Legal, Encyclopedia, Wikipedia.

Divestiture

The removal of assets from a person or firm's balance sheet through sale, exchange, closure, bankruptcy, or some other means. Divestiture may occur when a person or company has acquired more than he/she/it can properly administer. This sort of divestiture may occur slowly; for example, a corporation may slowly sell subsidiaries to concentrate exclusively on its core competence. On the other hand, divestiture may occur because a person or company has become cash poor and needs to build liquidity very quickly.

divestment

the closure or sale by a firm of one or more of its operating units (for example a production plant) or a whole business division. In the former case, divestment usually occurs in order to rationalize production and/or to concentrate the firm's output in a more modern plant. In contrast, the divestment of a whole business division represents a more fundamental strategic decision on the part of the firm. Divestment in this case may reflect a number of considerations, including a desire to pull out of an unprofitable, loss-making activity deemed to be incapable of TURNROUND; the wish to shed peripheral businesses in order to release cash and managerial resources which, in opportunity cost terms, could be more effectively, redeployed in the firm's other activities; a major rethink of a firm's strategic position involving a retrenchment back to ‘core’ businesses; and finally, a wish to avoid the opposition of the COMPETITION POLICY authorities, particularly in cases of MERGERS and TAKEOVER.

Divestment by one firm often presents an opportunity for some other firm to diversify (see DIVERSIFICATION), in turn, into new business areas, or for former competitors to increase their market shares. See ENDGAME STRATEGY, BUSINESS STRATEGY, BOSTON MATRIX, DEMERGER, MANAGEMENT BUYOUT, JOINT VENTURE, PRODUCT MARKET MATRIX, PRODUCT RATIONALIZATION, CORE BUSINESS.

divestment

the closure or sale by a firm of one or more of its operating units (e.g, a production plant) or a whole business division. In the former case, divestment usually occurs in order to rationalize production and/or to concentrate the firm's output in a more modern plant. In contrast, the divestment of a whole business division represents a more fundamental strategic decision on the part of the firm. Divestment in this case may reflect a number of considerations, including a desire to pull out of an unprofitable, loss-making activity; the divestment of ‘peripheral'businesses in order to release cash and managerial resources that, in opportunity cost terms, could be more effectively redeployed in the firm's other activities; divestment may reflect a major rethink of a firm's strategic positioning, involving a retrenchment back to ‘core’ businesses. Finally, divestment may be required so as to avoid the opposition of the COMPETITION POLICY authorities, particularly in cases of merger and takeover.

Divestment by one firm, in turn, often presents an opportunity for some other firm to diversify (see DIVERSIFICATION) into new business areas or for former competitors to increase their market shares. See RATIONALIZATION, BOSTON MATRIX, DEMERGER, MANAGEMENT BUYOUT.

References in periodicals archive ?
Faith organizations around the world have been in the lead on the divest/invest movement, and it's rapidly gaining steam - the state of California, pension funds and others are moving to divest.
The accounting firm said that banks could divest about EUR100bn in non-core loans this year.
The protests, organized by We Divest, came while TI-CREF
In the past, state pension funds have been required to divest from South Africa in the 1980s and from the Sudan in a bill that took effect this year.
A practitioner can fire some clients and divest others; it is just harder to explain to the fired clients why they were in that group.
If the church simply divests, nothing positive has happened.
To mitigate the potential for adverse effects on competition in five banking markets, BB&T has committed to divest to an out-of-market commercial banking organization branches that control sufficient deposits to make the proposal consistent with Board precedent and within the thresholds in the DOJ Guidelines.
The analysis of cumulative abnormal returns of matched pairs of sell-offs indicates that credit downgrades and transaction price disclosure affect the shareholders' wealth of firms that buy divested assets and of firms that divest.
We applaud AGF for its decision to divest from fraudulent, Iran-backed Lebanese bonds.
Over 800 global investors have now committed to divest their holdings in fossil fuels.
The move followed a campaign of more than a year by affected Palestinian villages of Bil'in and Jayyous and by Norwegian, Palestinian, Israeli, and international activist groups, including Adalah-NY, calling on the Norwegian government to divest from Africa Israel.
The campaign to divest from Darfur is being organized by a number of local groups, including Jewish World Watch, a coalition of more than 50 synagogues started by Rabbi Harold Schulweis of Valley Beth Shalom in Encino.