ABC created a new company,XYZ,from its subsidiary unit and maintained ownership of all of the shares in XYZ.When ABC felt market conditions were favorable,it did an IPO and sold 25 percent of its shares in XYZ.ABC has effectively completed
A)a reversal.
B)a divestiture.
C)an equity carve-out.
D)a spin-off.
E)a split-up.

Question

Quizplus · Accepted Answer

ABC's action of selling only a portion (25 percent) of its shares in XYZ through an IPO is an example of an equity carve-out. An equity carve-out involves a parent company selling shares of its subsidiary while still retaining controlling ownership.

ABC Created a New Company,XYZ,from Its Subsidiary Unit and Maintained