what is a divestiture 
a divestiture is the partial or full disposal of a business unit through sale exchange closure or bankruptcy a divestiture most commonly results from a management decision to cease operating a business unit because it is not part of a company s core competency a divestiture may also occur if a business unit is deemed to be redundant after a merger or acquisition if the disposal of a unit increases the sale value of the firm or if a court requires the sale of a business unit to improve market competition understanding divestituresa divestiture is the disposition or sale of an asset by a company as a way to manage its portfolio of assets as companies grow they may find they re in too many lines of business and must close some operational units to focus on more profitable lines many conglomerates face this problem companies may also sell off business lines if they are under financial duress for example an automobile manufacturer that sees a significant and prolonged drop in competitiveness may sell off its financing division to pay for the development of a new line of vehicles divested business units may be spun off into their own companies companies may be required to divest some of their assets as part of the terms of a merger or acquisition governments may divest some of their interests or property called privatization to raise money to pay off debt or give the private sector a chance to profit by divesting some of its assets a company may be able to cut its costs repay its outstanding debt reinvest focus on its core business es and streamline its operations this in turn can enhance shareholder value large companies experiencing unstable market conditions and competitive pressures may divest part of their business divesting assetsthere are many different reasons why a company may decide to sell off or divest itself of some of its assets here are some of the most common ones government regulation may require corporations to divest some of their assets especially to avoid a monopoly examples of divestituresdivestitures can come about in many different forms including the sale of a business unit to improve financial performance and due to an antitrust violation in 2023 meta formerly facebook sold the animation database giphy to shutterstock for 53 million that was an 83 loss from what the company had paid for giphy just three years earlier the sale was forced by u k regulators who believed that facebook s acquisition of the gif animation platform represented a violation of the country s antitrust laws in 2022 foods manufacturer kellogg announced its plans to split into three separate companies spinning off its cereal and plant based food brands while the legacy kellogg s company will focus on the frozen breakfast and snack foods that bring in 80 of the old company s revenue the spin offs will focus on the cereal markets and plant based foods 