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Investors value conglomerates: Merck remains an exception
Find out how conglomerate financial investors influence the capital market. Insights into the splitting of companies and the role of financial investors. Discover the irony behind private equity firms and their IPOs. #Financial Investors #Capital Market #PrivateEquity #Stock Exchange
Investors value conglomerates: Merck remains an exception
Conglomerate financial investors are significantly involved in the ongoing split of companies that has characterized the capital market for years. Investors acquire companies in order to break them up and bring the core business back to the stock market. A prominent example of this is the Douglas trading group, where the sale of all units except the perfumeries was initiated after Advent's entry. Under the influence of minority owner CVC, Evonik also gave up its energy and real estate divisions in order to position itself as a pure chemicals company.
In Germany, the chemical and pharmaceutical company Merck is one of the remaining exceptions to this development, as the company is controlled by a family. The tendency for financial investors to break up companies has significantly reduced the choices for investors who want to invest in conglomerates. It is paradoxical that private equity houses themselves are often a conglomerate of different companies that they have bought together, and that some of them end up going public, as in the case of CVC.
The concept of mixed shares becomes more important when financial investors such as CVC, traditionally known for their involvement in the separation of companies, venture into the stock market themselves. This development shows the versatility and changeable nature of the capital market, in which conglomerates are becoming increasingly rare and investors are increasingly relying on the opportunities of split companies.