DIVESTMENT activity will increase to £250bn this year as company’s spin off non-core divisions, analysis from Deloitte shows.
According to Deloitte, the global value of corporate spin offs will increase by 92% from £130bn in 2011.
European companies have so far announced spinoffs worth £10.5bn for 2012. However, further analysis from report co-authors The Spinoff Report indicates that there are potential European corporate spinoffs with a value worth £131bn in the pipeline.
“Investor appetite for spinoffs is growing, often because major austerity measures have an adverse effect on companies’ plans for growth. Management boards across all markets and capitalisations are seeing their outlooks and strategies being challenged by increasingly vocal investors seeking greater transparency and shareholder value,” said Ryan Mendy, chief operating officer at The Spinoff Report.
“Unless heavily incentivised, both institutional and private investors are more and more unwilling to aid traditional-style corporate restructurings (IPOs, etc.) on yet to be proven strategies.”
The basic materials sector – metals, mining, minerals and resources businesses will make up nearly a quarter of spinoff activity in 2012, the report found. Consumer goods and services businesses will make up 22% of spinoff activity in 2012.
“An increasing number of medium to large cap conglomerate CEOs are awakening to the fact that big is not always best” Mendy said.
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