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Demerger is the strategy of splitting off a part of an existing company to become a new company. A demerging company operates completely separate from the original company. Shareholders of the original company are usually given an equivalent stake of ownership in the new company. A demerger is often done to help each of the segments operate more smoothly to focus on a more specific task.
Immediately after the demerger, shareholders have a direct 100% interest in each of Head Company and the demerged entity.
There are three ways to demerge that can be used alone or in combination: