Global firms plan more divestments as shareholder pressure mounts – EY

© Reuters. FILE PHOTO: A street sign, Wall Street, is seen outside New York Stock Exchange (NYSE) in New York City, New York

(Reuters) – Global corporate executives continue to see the sale of business units as a key response to pressures from shareholders eager to maximize returns on their investment and changing technology, according to Ernst & Young (EY).

Those planning to divest a certain aspect of their firm in the next two years stood at 84 percent, almost double the level the accountancy firm recorded in its 2017 divestment survey and fractionally below the record-high figure from last year.

Such behaviour highlights how companies are seeking to ensure that business models are focused on core competencies and unnecessary costs are stripped out to bolster profitability at a time when forecasts for global economic growth are deteriorating.

Such considerations are important when even traditionally passive investors are joining activist names in pushing companies to perform better.

The scale of potential divestments is also escalating, with 70 percent of executives polled saying the potential sale would be “large-scale”, up from 50 percent in 2018.

However, the level of companies choosing to offload units because they are performing poorly against their competitors fell to 69 percent from 85 percent last year.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

READ  Rare and most valuable 20p coins that could be worth up to £750

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.


Leave a comment

Your email address will not be published. Required fields are marked *