Today, McGraw-Hill announced that it was splitting itself into two separate companies.
This isn't the first time this has happened this year. Earlier this year, both Kraft and Motorola announced similar arrangements, each splitting their operations into two separate public companies (one of which, Motorola Mobility, was scooped up by Google).
In addition, fledgling companies like Yahoo and Kodak are cited by analysts as being worth more broken into pieces than as they currently stand.
From my personal observation, their has definitely been an uptick in companies breaking into two or being advised to break into pieces.
Does anyone know if this is an actual trend, and if so, are banks picking up on this trend and pitching these kinds of deals to investors? Is the conglomerate model breaking down? Why are companies opting to break into smaller pieces?
Subscribed. I would add to this but the only thing I can think of with any relevance (?) is GM getting rid of the less popular brands because it was too inefficient to go through so many people to get stuff done.
While there are a lot of them going on right now, I'm not sure if it's a new trend. They've always happened, and they are often more common during difficult economic times (so in that light, I guess it could be a cyclical trend). They are a good way to unlock additional value to shareholders if management feels that a stock is being underpriced in the market and also as a way for a company to direct focus to core competencies.
A few big ones in the past that I can think of off the top of my head:
-Motorola / Freescale -TCI / Liberty, which has been further broken down -Time Warner / TW Telecom -AOL / Time Warner -Tenneco / Pactiv -Ford / Visteon -GM / Delphi -Costal States / Valero -AT&T break-up (govt mandated due to anti-trust issues) -GE / NBC (more recent)
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