Also known as: divestitures · divest · divests · divested · divesting · divestment · divestments
Written by attorneys · grounded in primary & secondary sources — see below
2 senses
A cutting short of an estate before its normal expiration upon the occurrence of a stated event. The mechanism transfers the interest to another person rather than allowing the estate to end by its own terms or by expiration.
A cutting short of an estate before its normal expiration upon the occurrence of a stated event. The mechanism transfers the interest to another person rather than allowing the estate to end by its own terms or by expiration.
Select any source to read its text and confirm it supports the definition.
A court-ordered disposition of assets or business units by a defendant found to have violated antitrust statutes. The remedy restores competition by separating the offending combination or acquisition.
Select any source to read its text and confirm it supports the definition.
A court-ordered disposition of assets or business units by a defendant found to have violated antitrust statutes. The remedy restores competition by separating the offending combination or acquisition.
Each sense below has its own examples, sources, and questions.
Diego Duarte conveyed Blackacre to Darius Dixon for life, remainder to Destiny Davis if she survives Dixon. The conveyance left a reversion in Duarte. Because the remainder in Davis would become possessory only upon the natural expiration of the life estate and would not cut short any interest except the reversion left in Duarte, the interest qualifies as a remainder under the governing definition.
Broz learned of a cellular license opportunity while serving as a director of Cellular Information Systems. The company later claimed the opportunity belonged to it and demanded that Broz divest any interest he had acquired. The court examined whether Broz had usurped a corporate opportunity that required divestiture.
Divestment ends an interest by cutting it short before normal expiration. Defeasance is broader and includes both expiration according to the estate's own terms and cutting short by a power of termination or executory limitation.
Supporting sources
A remainder becomes possessory only upon the expiration of prior estates and cannot divest any interest except one left in the transferor. An interest that cuts short a simultaneously created estate in a transferee is an executory interest.
Supporting sources
Brown Shoe acquired Kinney and the district court found the merger violated the Clayton Act. The court required Brown to sell all Kinney stock and assets and to operate Kinney independently until the sale closed. Brown appealed the divestiture decree while the district court retained jurisdiction to supervise compliance.
M & F Worldwide's controlling shareholder offered to buy the minority shares. The special committee evaluated whether asset divestitures or sales to third parties would produce greater value than the controller's bid. The committee's consideration of divestiture alternatives formed part of the record supporting the fairness of the eventual transaction.
Philadelphia National Bank proposed to merge with another bank. The Supreme Court held the merger violated section 7 of the Clayton Act. The Court affirmed that divestiture of branches or assets was the appropriate remedy to restore competition in the relevant market.
Cinerama shareholders who had sought appraisal later discovered evidence of fraud in the merger. The court held that the subsequent fraud action was not foreclosed by the appraisal election. Rescissory damages or other relief remained available even after the merger closed.
The court may order the acquiring firm to divest the acquired assets or stock. The divestiture restores the competitive structure that existed before the unlawful combination.
Supporting sources
…connection with the fraud.[^maj-29] Petitioners also could rebut the presumption of reliance as to plaintiffs who would have divested themselves of their Basic shares without relying on the integrity of the market. For example, a plaintiff who believed that Basic's statements were false and that Basic was indeed engaged…