M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

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Tuesday, August 30, 2011

Dis-synergies?

From an H-P spokesman (via Reuters):

We prefer a spin-off as a separate company and the working hypotheses is that a spin-off will be in the best interests of HP's shareholders, customers and employees," a HP spokeswoman said. "However, we have to complete the diligence process and validate this assumption, including fully understanding the dis-synergies in separating the PSG business from HP.

Spin-offs are always interesting transactions - particularly since they are often used to disentangle a firm from an earlier mistake (e.g. TimeWarner's spin-off of AOL last year).  The H-P spin-off of its personal systems group will be interesting because it looks like it's part of a strategy to bury H-P. Al Lewis at the WSJ previously weighed in how a spin-off might be value-destroying for H-P.  I'm still wondering why they think this is a good idea.  It seems like there may be many "dis-synergies".

-bjmq

http://lawprofessors.typepad.com/mergers/2011/08/dis-synergies.html

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