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Corporate Restructuring Spin Offs, Divestitures

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Compare and Contrast types of Corporate Restructuring: spin offs, divestitures

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Compare and Contrast types of Corporate Restructuring: spin offs, divestitures

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Divestiture occurs when a corporation sells its assets, divisions, subsidiaries to another corporation or combination of corporations or individuals. The seller typically receives consideration for the assets sold. Divestitures are typically taxable events for selling corporation (new basis for purchaser).

In spin-offs, Typically parent corporation distributes on pro rata basis, all the shares it owns in subsidiary to its own shareholders. No money generally changes hands and it is a Non taxable event.

Reference: http://www.kellogg.northwestern.edu/faculty/thompsnt/htm/emp-corp-restruc/divest_2001.ppt

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