A rising number of US companies have moved to streamline operations this year through asset sales and spin-offs in a bid to remedy lacklustre stock market valuations for conglomerates.
Divestitures have risen to a record share of global mergers and acquisitions activity so far this year, according to Dealogic data. Spin-offs and asset sales accounted for about half of global dealmaking, up slightly on last year. In the US, such activity is up more than 40 per cent on the first half of 2010.
“There is a trend right now in the public markets towards purity, focus and specialisation,” says Mark McMaster, vice-chairman of US investment banking at Lazard. “The impetus for separation is usually a meaningful and persistent undervaluation of a portfolio of businesses.”