Carve out


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Carve out

Usually occurs when a company decides to IPO one of their subsidiaries or divisions. The company usually only offers a minority share to the equity market. Also known as equity carve out.

Equity Carve Out

The act or process of a company making an IPO on one of its subsidies without fully spinning off. During an equity carve-out, the parent company becomes majority shareholder and only offers a minority share to the market. This gives the subsidiary a degree of autonomy (such as its own board of directors) while still retaining access to resources at the parent company. Most of the time, an equity carve-out ultimately results in the parent company fully spinning off the subsidy. It is also called a partial spin off.
References in periodicals archive ?
The asymmetric information hypothesis states that firms carve out subsidiaries that are overvalued by the market (Nanda, 1991).
Investors can own shares in food company Nabisco, a carve out of RJR, without owning shares in the parent tobacco company, for example.
HSI/Wellpoint, California Healthcare Network, Allina); price and premium reductions; and the scramble to create specialty carve out networks (Salick Healthcare, Caremark, National Cardiac Network).