The harder they fall: conglomerates are stricken by a shift in investor preference

Citation

(2006), "The harder they fall: conglomerates are stricken by a shift in investor preference", Strategic Direction, Vol. 22 No. 4. https://doi.org/10.1108/sd.2006.05622dad.004

The harder they fall: conglomerates are stricken by a shift in investor preference

The harder they fall: conglomerates are stricken by a shift in investor preference

Roberts D., Authers J., Wighton D., Smith P. Financial Times (UK), 28 Oct, 2005, Start page: 15, No. of pages: 1

Purpose – to examine whether the day of the huge diversified conglomerate is passing. Design/methodology/approach – observes that a number of US-based conglomerates are breaking up in the face of flagging share prices, seen to be a result of changes in investor preferences caused by the increasing influence of hedge funds and private equity groups, and predicts that certain major UK companies are likely to follow suit to concentrate on their core assets; considers the trends behind these moves, and the different needs of the “value” investors who value the high dividends from conglomerates, and the funds seeking high earnings growth. Discusses the rich pickings to be had by private equity groups waiting in the wings for such demergers. Originality/value – reiterates the view that bigger is not necessarily always better.Style: ViewpointISSN: 0307-1766Reference: 34AZ051

Keywords: Conglomerates, Divestment, Equity capital, Share prices, Shareholders