Teoretisk og empirisk undersøgelse af konglomeratrabatten: Et casestudie af Schouw & Co.

Frederik Gerhardt Schierup & Mathias Vindberg

Student thesis: Master thesis


The purpose of the thesis is to investigate the existence of a conglomerate discount in Schouw & Co. at 10th March 2017 and to substantiate the finding with expectations formulated from extant literature on the topic. Schouw & Co. is one of the last conglomerates in Denmark and since the company is very focused and determined on its diversified organizational structure, the case study methodology applied allowed for a specific analysis and discussion of an extremely relevant and present-day case. The thesis initiates with a comprehensive literature review on the motives for and the effect of diversification. Based on this chapter, several theoretical expectations are formulated. Hereafter, an in-depth strategic and financial analysis of the portfolio companies follows, which is concluded with a portfolio evaluation. The next three chapters builds on the analysis and presents for each of the companies their budgets and weighted average cost of capital. The chapters conclude with a sum-ofthe-parts valuation. The authors find a valuation discount of 2,3% as per 10th March 2017. The result is evaluated by analysing the theoretical expectations from chapter one. It is found that while Schouw & Co. benefit from coinsurance between segments, cross-subsidisation of Fibertex Nonwovens seems to prevail. Debt and performance is not found to indicate discount nor premium. It is concluded that the 2,3% discount is rather a signal of the stock being undervalued than suppressed by a conglomerate discount. The conclusion is interesting as it challenges existing literature and empirical evidence on the topic and calls for more company-specific research in determining the existence of a conglomeratediscount. This paper introduces a simple framework to do so and encourages further research on the topic.

EducationsMSc in Finance and Accounting, (Graduate Programme) Final Thesis
Publication date2017
Number of pages255