Family Travel is the sole shareholder in its subsidiary, FT Insurance. Family Travel has decided to divest itself of its insurance operations and does so by distributing the shares in the subsidiary to the shareholders of Family Travel. This distribution of shares is called a(n):
A) lockup transaction.
B) bear hug.
C) equity carve-out.
D) spin-off.
E) split-up.

Question

Quizplus · Accepted Answer

This distribution of shares is called a spin-off, where the parent company distributes the shares of a subsidiary to its shareholders, resulting in the subsidiary becoming an independent company.

Family Travel Is the Sole Shareholder in Its Subsidiary, FT