Putting Deals through a Microscope | Traversing Transactions attempts at dissecting a deal by analyzing various aspects and nuances of an M&A Transaction, traversing through a complex mesh of Commercial, Regulatory, and Tax ("CRT") imperatives!
Putting Deals through a Microscope | Traversing Transactions attempts at dissecting a deal by analyzing various aspects and nuances of an M&A Transaction, traversing through a complex mesh of Commercial, Regulatory, and Tax ("CRT") imperatives!
Putting Deals through a Microscope | Traversing Transactions attempts at dissecting a deal by analyzing various aspects and nuances of an M&A Transaction, traversing through a complex mesh of Commercial, Regulatory, and Tax ("CRT") imperatives!
Partial Demergers: When Value Mirrors but Control Does Not
In a partial demerger, the demerged company transfers its undertaking but keeps a stake in the resulting company. Shareholders therefore hold part of the new company directly and the rest through the parent.
On a see-through basis, no shareholder’s economic interest changes. Control is a different matter. Where the demerged company has no promoter group, as with ITC and ITC Hotels, the retained stake adds to no one’s control. Where promoters are present, the same structure can turn a minority position into a majority of the votes in the resulting company, and it is there that regulatory scrutiny has focused.
The attached slide sets out the mechanics, an illustration, and the structuring responses available.