ACCA Strategic Professional · Advanced Financial Management · Business re-organisation
Zeta plc, a diversified group, transfers the shares of its subsidiary Zeta Foods to its existing shareholders in proportion to their holdings, and no cash is received by Zeta plc. Which type of unbundling is this?
This is a spin-off, also called a demerger. The subsidiary's shares are distributed to existing shareholders in proportion to their holdings, so ownership mirrors the parent's and no cash is received. A sell-off or carve-out would bring in cash from new buyers.
- AA spin-off (demerger)Correct
- BA sell-off to a trade buyer
- CAn equity carve-out
- DA management buy-out
Explanation
In a spin-off, a new separate company is created and its shares are distributed pro rata to existing shareholders, so ownership is identical and no cash is raised. A sell-off involves a sale for cash to a third party. A carve-out sells a minority of shares to new outside investors for cash.
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