Product Code Database
A demerger is a form of corporate restructuring in which the entity's business operations are segregated into one or more components. It is the converse of a merger or acquisition.
A demerger can take place through a spin-off by distributing or transferring the shares in a subsidiary holding the business to company shareholders carrying out the demerger. The demerger can also occur by transferring the relevant business to a new company or business to which then that company's shareholders are issued shares of.
In contrast, divestment can also "undo" a merger or acquisition, but the assets are sold off rather than retained under a renamed corporate entity.
Demergers can be undertaken for various business and non-business reasons, such as government intervention, by way of antitrust law, or through decartelization.
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