Shareholders boosted by asset sell-offs

Tim Wallace
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A HUGE spike in divestment activity by businesses has boosted shareholder returns through the recession, according to a report out today from Deloitte.

Firms globally have divested more than $335bn (£208.1bn) of assets since 2008, with European firms accounting for 65 per cent of big sell-offs since the crisis began. The study looked at the share performance of $500m of assets in the recession.

It found the buyers and sellers outperformed their relative indices 89 per cent of the time.

“Divestments are increasingly important to the business strategies of firms – we expect to see more active disposal of assets to refocus on core businesses and create strong platforms for growth,” said Deloitte’s Angus Knowles-Cutler.

“If well communicated to the markets, such divestments can create greater shareholder returns.”

The report found financial pressures and regulatory requirements drove most divestments through the recession, while now they are increasingly based on a strategic realignment towards growth.

The study also found emerging market firms are taking advantage of the rise in divestments – they snapped up 23 per cent of assets on sale last year.