This study examines the source of gains associated with Australian divestiture activity, defined as a voluntary modification of the firm's productive assets by a selloff of a complete operating division or wholly-owned subsidiary of the divesting firm. The sell-off announcement produces positive average abnormal returns of 1.15% over the two-day announcement period. We conclude that the gains arise predominantly from divestitures that have a strategic focus as demonstrated by, first, the divested unit is unrelated to the firm's core activities (a strategic divestiture), second, the significance of the strategic variable in explaining the positive market reaction in regression analysis, and, third, the finding of more significant results where the intended use of proceeds of the sell-off is for strategic purposes.