unbundling is what happens when a parent company with a few lines of business decides to keep its core businesses and sell the rest of its assets, product/service lines, divisions or subsidiaries. the most common reason for unbundling is that breaking apart the company into a more efficient and focused firm should result in a better performing business. unbundling may also occur if a company stock is performing poorly and/or if the company needs capital. it could also be used to raise cash for shareholders. the decision to unbundle may come from a company's board of directors and its management or regulators. governments may force corporations to unbundle for a variety of reasons such as preventing monopolies. when regulators call for unbundling, the company stock price is likely to drop. however, if the board and/or management decides to unbundle, then the stock will usually rise. unbundling happens often during takeovers. when one company purchases another, the parent company may only be interested in the acquired company's most valuable divisions and opt to sell its less successful businesses. this is called the sell-off. in mergers and acquisitions, unbundling may be used to help finance a takeover. there may be other reasons for a corporation to unbundle. for example, a few years ago, jasper motors acquired mohi cars, a luxury automobile brand. but, due to a weak economy, the demand for luxury vehicles rapidly declined and mohi cars is now losing money. jasper motors decides to sell mohi cars and focus on producing affordable vehicles. murphy motors finds a buyer for mohi cars but part of the deal is that jasper motors retain some ownership over mohi cars. jasper motors agrees to the terms but under the condition that ? unbundled mohi cars develops a line of affordable luxury cars that will give it a comparative advantage.