Demergers and destruction: activists press Europe conglomerates

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By Toby Sterling
| AMSTERDAM

AMSTERDAM The days of the European conglomerate may be numbered, as activist shareholders are pressing diversified groups to spin off secondary businesses and focus on doing one thing well.

Many investors and analysts – and some managers – say that in a world where good returns are hard to come by, breaking up businesses that don’t belong together can be profitable.

In theory, spinning off business divisions allows the parent company and the spin-off alike to focus better on their respective strategies, while investors tend to value both more highly due to greater transparency.

“I think demergers and the destruction of conglomerates is the next major trend in the M&A market,” said Christer Gardell, co-founder of Cevian, a Swedish-based activist investment fund.

“The trend has already started, it’s going to run for the next 10…

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