Webjet (ASX:WEB) have recently announced a potential demerger of two divisions, WebBeds and Webjet B2C into two separate listed companies. So why do companies participate in demergers? Here are some of the key motivations: Focus on Core Business: Often, companies become conglomerates over time, diversifying into various sectors. Demergers allow them to streamline operations by separating non-core businesses, enabling each entity to focus more on its core competencies. This can enhance operational efficiency and improve management focus. Unlocking Shareholder Value: …

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A demerger is a corporate action where business operations are separated, and a separate entity is formed and listed on the stock exchange. In this article we discuss the definitions of a demerger, why companies participate in these corporate actions, and the implications for shareholders. Definition A demerger occurs when a large organisation decides to restructure its business and splits into different companies and list them as separate entities on the stock exchange. The parent company then issues shares of …

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