Divestment is opposite of investment. It is also known as divestiture. In divest
ID: 373877 • Letter: D
Question
Divestment is opposite of investment. It is also known as divestiture. In divestment the assts of the company is sold for benefits. The benefits like political, financial and social goals. Business department, Subsidiary, , real estate, equipment and any other property can be divested.
This happens majorly when any company wants to sell its non core business and to increase focus on core business.
There are 3 ways to do divestment.
Spin-off,
Equity carve-out
Direct sale of assets.
Spin-off- When a company sells its subsidiary company shares to its shareholders. It is non tax and non cash selling.
Equity carve-out- When a parent company sells a some % of its equity in its subsidiary to the public with the help of a stock market.
Direct Sale of Assets- When whole the subsidiary is sold to another party. It is done with cash hence taxes are involved with it.
For an example Tata Communication started selling its Tata cellular business in order to reduce the debt. It did not work well and later the buyer of Tata Cellular closed the company. Now this company is no more in run.
Explanation / Answer
What is Divestment Strategy? can you please give me an example a company that go through divestiture if they are viable and doing well?