breakup value

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Breakup value

Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Breakup Value

The value of a division in a company if that division were its own independent company. Companies considering taking over another use the breakup value, among other metrics, to determine whether a takeover is worth the time and expense. It is also called the private market value.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

breakup value

The market value of all the individual parts of a firm if the firm were to be broken up and the individual parts operated independently. If the breakup value of a firm exceeds the market value at which its stock trades, the firm may be managed and operated inefficiently. In such a case, stockholder holdings would increase in value if parts of the firm were divested. Many takeovers originate when raiders spot firms with breakup values that exceed the prices at which those firms' stocks are traded.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
It will be seen from the Break-up table that almost all the companies registered upward trend in their Breakup Values except Engro Chemical and Bawany Air Products during the period under review.
It will be seen from the above table that out of 9 companies, 6 companies have showed an increase in their Breakup Values, while 3 companies namely Dawood Hercules, Engro Chemical and Clariant Pakistan have depicted downward trend in their Break-up Values as compared to previous year.
In general, out of 100 companies, 28 companies showed a decline in their Breakup Values as compared to the previous year.