As coronacrisis progresses expect companies to separate portions of business. Such actions will be typically driven by strategic decisions to divest businesses and/or valuation creation opportunities. Often there is a valuation drag on due to ownership of lower valuation businesses. Spin-offs often have potential for shareholder value creation when investors have higher valuation expectations of the new separate public company.
ActiveAllocator Research – Re. WSJ Wed, June 24, 2020, A1 article ‘Dell Explores Spinning Off $50 Billion VMware Stake”. I see at least three options for Dell – an outright spin-off, a carveout, or a total sale. All of these will unlock Dell’s $50 billion, 81% VMware stake, boost stock-price which has been near static while tech indices have surged past year, and reduce its debt burden. We have a fair bit of experience in the investment banking space and I will keep you posted as the deal progresses.