Tyco (and Siemens) are the most dynamic companies in my field: water and related permitting business. Now Tyco is breaking up in three parts. I would like to have more time to learn and understand the dynamics of growing by conglomeration and then splitting.
3 comments:
Tyco is run by Anglo-Saxon financiers, who look to cash out all the time. Siemens is run by industrialists who have have a sense of obligation to their workers and their country. That seems to be the essential difference.
Ivan
I suspect that the managers are bored with day-to-day operations and look for excitement in dramatic mergers and splits. The bankers and the lawyers are the main winners.
It's all about stock price (and what the investment bankers can sell to management). If management thinks that they can increase stock price (and therefore their compensation) by conglomeration, they will, and if they think they can make more by splitting, they'll do that. Meanwhile the bankers encourage churn because they make money by doing transactions either way. First they put the company together, then take it apart, then put it together again, etc. in an endless cycle. In times of high multiple P/E , splitting is favored and in low multiple times, acquisition, generally speaking.
K
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