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I am curious about the difference between a divisive merger and an ordinary merger.

I am asking because I do not fully understand exactly what a divisive merger means. I often see the term 'divisive merger' in connection with corporate restructuring or business reorganization, but I am confused about whether it simply means that a company is split, or whether it also includes the concept of merging with another company. I am also curious how it differs conceptually from an ordinary merger. I would be grateful if you could explain.

Divisive merger

Answer

Published: 2026-01-23

Author : Kuk Il KIM

First, a divisive merger is a corporate restructuring method in which only a specific business division, among the several businesses operated by one company, is separated and then merged into another existing company.

In this case, the existing company continues to exist while only part of its business is transferred, and the company receiving it absorbs that business.

Unlike a simple 'division,' which merely splits a company, or a 'merger,' which combines companies as a whole, it is characterized as a combined form of the two systems.

Such a divisive merger is used mainly to dispose of non-core businesses or to strengthen the expertise of a particular business.

Because the entire company is not merged, it offers the advantages of dispersing management risk and reorganizing the business structure more flexibly.

However, the legal and accounting procedures are fairly complex, as they require a special resolution of the general meeting of shareholders and a creditor-protection process.

By contrast, an ordinary merger is a structure in which the entire company is combined.

In an absorption merger, one company absorbs another in its entirety and survives, whereas in a consolidation merger, all of the merging companies are dissolved and a new company is established.

In that all assets, liabilities, rights, and obligations are transferred, it differs fundamentally from a divisive merger, in which only part of the business is transferred.

If you are curious about a merger strategy suited to your company's situation, you may confirm it through a consultation with a mergers and acquisitions attorney.