Divestiture Law and Legal Definition

Divestiture is a disposition or sale of an asset by a business, such as through sale, spinoffs, split-ups, split-offs, tracking stocks, IPO carveouts, recapitalizations, merger securities, post-bankruptcy securities and liquidations.

A well-known divestiture occurred in the communications industry in 1984, when AT&T and its operating telephone companies split up. The Department of Justice's Modification of Final Judgment broke the seamless national network into 164 separate pieces called Local Access and Transport Areas (LATAs) to handle local phone traffic. Through this move the DOJ created two distinct types of service providers local exchange carriers (LECs) and interexchange carriers (IXCs).