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 completed an equity carve-out by selling 25% of its shares in XYZ while still maintaining ownership of the remaining shares. This allows ABC to raise capital by selling shares of a subsidiary while still retaining control over the company.

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