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A situation in which two or more divisions of a company split into two or more independent companies. A breakup can occur as the result of anti-trust action by a government or if the company simply believes the divisions will be more profitable separately. A breakup should not be confused with a break. See also: Spin-off.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
The division of a company into separate parts. The most famous breakup to date was the 1984 division of AT&T (formerly, American Telephone & Telegraph Company). This breakup was intended to increase competition in the communications industry.
Case Study In early 1996, Dun & Bradstreet management announced the firm would be divided into three publicly traded companies. Dun & Bradstreet would survive as a smaller, leaner firm while A.C. Nielsen, the media-ratings company, and Cognizant, a marketing information firm, would become separate corporations. At the time of the announcement, all three firms were part of the same parent company. In announcing the breakup, Dun & Bradstreet's chief executive officer said the decision was driven by management's desire to improve shareholder value. That statement implied management believed the three companies would be more valuable as separately owned and managed enterprises than as components of a single company.
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.