A company's board of directors decides to divest all shares of a subsidiary. This action is characterized as:

The correct answer is that divesting all shares of a subsidiary is characterized as a spinoff. A spinoff occurs when a company creates a new independent company by distributing new shares to its existing shareholders, typically separating one of its business units or subsidiaries. In this case, the board of directors' decision to divest implies that they are separating the subsidiary from the parent company completely, allowing the subsidiary to operate independently.

This process often aims to unlock shareholder value, as the market may value the new entity differently than it valued it as part of the larger company. The action of divesting is distinct from an acquisition, where one company buys another, or a tender offer, which involves one company making an offer to purchase the shares of another company, often at a premium. Additionally, a buyback refers to a company's repurchase of its own shares from the marketplace, which does not apply in this context.