Wealth Effects for Buyers and Sellers of the Same Divested Assets

There has been a major restructuring of corporate assets over the past decade in America. Some of the most notable restructuring activity includes mergers of whole firms. However, much restructuring involves the selling and/or buying of units, divisions, and selected assets of firms. These types of nonmerger restructuring of divisions and assets are called sell-offs and/or divestitures and are the focus of this study. Sell-offs typically occur to strategically realign the firms' assets and streamline operations or to raise capital for firms in financial difficulty or close to financial distress. Moreover, the sales of divisions or divested assets are often made without competitive bids from more than one firm. Often the price of the transaction is not made public at the announcement of the divestiture. There have been other studies that have measured the wealth impacts of divestitures on the buyers and sellers separately, but the purpose of this paper is to measure the wealth effects of both the buyers and sellers of the same divested assets to determine how these wealth gains are shared among buyers and sellers in a controlled sample of matched pairs.