Demerger

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Demerger is the converse of a merger or acquisition. It describes a form of restructure in which shareholders or unitholders in the parent company gain direct ownership in a subsidiary (the ‘demerged entity’). Underlying ownership of the companies and/or trusts that formed part of the group does not change. The company or trust that ceases to own the entity is known as the ‘demerging entity’. If the demerged entity represents the majority of the company's operations, the resulting company is referred to as the stub.

Demergers can also result from government intervention, usually by way of anti-trust/competition law, or through decartelization.