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    Hanson PLC After 1991

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    CHINMAY JAIN
    The document discusses whether diversification destroys value and traces the history of Hanson Plc, a formerly diversified company. It went through several spin-offs and acquisitions in the 1990s and 2000s before being acquired by Heidelberg Cement in 2007.

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    Hanson PLC After 1991

    Uploaded by

    CHINMAY JAIN
    16 views6 pages
    The document discusses whether diversification destroys value and traces the history of Hanson Plc, a formerly diversified company. It went through several spin-offs and acquisitions in the 1990s and 2000s before being acquired by Heidelberg Cement in 2007.

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    Hanson Plc After 1991

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    The document discusses whether diversification destroys value and traces the history of Hanson Plc, a formerly diversified company. It went through several spin-offs and acquisitions in the 1990s and 2000s before being acquired by Heidelberg Cement in 2007.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    16 views6 pages

    Hanson PLC After 1991

    Uploaded by

    CHINMAY JAIN
    The document discusses whether diversification destroys value and traces the history of Hanson Plc, a formerly diversified company. It went through several spin-offs and acquisitions in the 1990s and 2000s before being acquired by Heidelberg Cement in 2007.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 6

    Hanson Plc

    Prof Ashutosh Kumar Sinha


    IIM Lucknow
    Diversification Discount
    • Does diversification destroy value?
    – 1990s
    • Diversified firms traded at a discount
    – relative to single segment firms in the same industry
    – Compared to the firms value that would result if the
    diversified firm were split into its different businesses
    – An unsettled question so far
    • There is as much evidence of firms destroying value by staying
    diversified, as that single segment firms are destroying value by
    not diversifying
    • On average, diversification is now not believed to destroy value

    7/13/2021 Prof Ashutosh Kumar Sinha, IIM Lucknow 2


    Wealth Destruction on a Massive Scale

    Ref: Moeller, Schlingemann and Stulz, 2005, Journal of Finance

    7/13/2021 Prof Ashutosh Kumar Sinha, IIM Lucknow 3


    Wealth Destruction on a Massive Scale

    Ref: Moeller, Schlingemann and Stulz, 2005, Journal of Finance


    7/13/2021 Prof Ashutosh Kumar Sinha, IIM Lucknow 4
    After 1991
    • Attempted acquisition of Imperial Chemical Industries resulted
    in failure

    • 1995
    – Some manufacturing facilities spun off: US Industries

    • 1996
    – Hanson Trust broken up into 4:
    • Hanson Plc; Imperial Tobacco; The Energy Group; Millennium
    Chemicals

    • Dec 1997
    – Lord Hanson steps down as Chairman

    • May 2007
    – Heidelberg Cement acquired Hanson Plc for about 8 billion pounds sterling
    – Combined entity: second largest cement and building materials company in the
    7/13/2021 world Prof Ashutosh Kumar Sinha, IIM Lucknow 5
    Thank You

    7/13/2021 Prof Ashutosh Kumar Sinha, IIM Lucknow 6

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