Abstract

Value Increase by Way of Disinvestment by Large German Industrial Groups

Because of the great attention paid to mergers and acquisitions in the course of the last few years, the eyes of the academic world mostly focused on the visions of buyers and their synergy effect potentials as well as on the response of the capital market to the buyer side’s shares. By contrast, the perspective of the other side - that of the seller - has hardly been analysed in Germany so far. Besides corporate unit sales within the framework of sell-offs, especially the carve-out and the spinoff instruments may be useful in this context.

The disinvestment frequency increased visibly in the course of the 1990s. Since the disastrous stock-exchange years of 2000 and 2001 saw many disinvestment cases as well, this trend in the wake of a stock-exchange boom cannot only be explained by the phenomenon of “fashionableness”. Very few studies have hitherto attempted to identify and explain possible value increases in the wake of disinvestment. This is where the present article starts.

We show that share-price responses to disinvestment announcements have resulted in clearly positive abnormal yields. Disinvestment or at least its announcement effects creates value. This applies in particular to carve-outs as well as to sell-offs, though to a significantly smaller extent. There has not been any clustering of share-price responses by branches or by periods of time.