Divestiture

A company’s disposition of a business or asset, including through a sale or a spin-off. A sale transfers it to a buyer for consideration; a spin-off distributes shares in a business to the parent’s shareholders.

Divestiture in practice

Hypothetical: a conglomerate sells a noncore unit to a fund. The sale is the seller’s divestiture and the fund’s acquisition. A spin-off is another form of divestiture with a different structure, rather than a strict synonym for the whole category.

Source: SEC Financial Reporting Manual: dispositions and spin-offs.

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