Conglomerates in the West are feeling distinctly unloved these days. Investors and business leaders have become increasingly skeptical toward them, unconvinced of the benefit of grouping a number of diverse businesses together under one corporate umbrella. In some markets, they are seen as lumbering, unfocused, and inefficient. The result? Markets have applied a “conglomerate discount” to these businesses, valuing them below the sum of their parts. The removal last year of U.S. conglomerate General Electric from the Dow Jones Industrial Average is perhaps the most obvious example of this. Investors were already taking aim at conglomerates in Europe well over a decade ago, notably in the cases of Mannesmann and Preussag, two storied German conglomerate names that shed their long-standing industrial legacies to become focused businesses in a series of dramatic multibillion-euro deals in the late 1990s and early 2000s. Related stories s+b Blogs by Zafer Achi, Chipper Boulas, Ian Buchanan, Jorge H. Forteza, Lando Zappei Such skepticism may be well founded in developed economies such as the U.S. and Europe. In emerging markets, however, including India, Mexico, and Southeast Asia, the conglomerate is alive and well, and a number of factors are providing a supportive backdrop for this business… Read full this story
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