The Special Appeal of Spinoffs
Nov 5, 2018
By Antonella Ciancio / Global Finance:
Large companies around the world are breaking off pieces or breaking up in record numbers. Will the boom last?
Global conglomerates from the Americas to Europe to Southeast Asia are slimming down and muscling up to address activist investors’ demands for higher returns and improved operational performance—and, perhaps, to cash in before the decade-long bull run in equities peaks.
“Over the 10 years that we’ve been analyzing spinoffs, the bulk of activity in corporate breakups has been close to the bottom or near the top of an economic cycle,” says Jim Osman, CEO of The Edge Consulting Group. “While we are not calling the top of the market right now, we believe that the value in a lot of companies has been realized; and in order to provide even greater value, corporates as well as the activists we advise are examining ways that this can happen. Spinoffs are great for giving shareholders that.”