Dismantling Conglomerates: A Study of the Market Reaction to Divestments

Simon Toftlund Mølsted

Student thesis: Master thesis

Abstract

I construct a unique dataset from Eikon of the return of conglomerate stock prices on the dates that they announce, rank, and effectuate a divestment deal. Using regression analysis, I find the differences in divestment premia above the S&P 500 based on form, size, target and acquiror of the deal. I find that there is generally a positive divestment premium associated with all 3 dates. Generally pure spin-offs and consumer products and services command the highest premia while value of the deal is insignificant. Separating data into pre and post 2009 financial crisis reveals a change to mergers and high tech acquirors leading toa bigger divestment premium. The results may however be dubious as they do not hold up for the US only traded companies despite that they have higher overall divestment premia.

EducationsMSc in Advanced Economics and Finance, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2020
Number of pages33
SupervisorsBersant Hobdari