Assessed Blog 5: 3G and Berkshire Hathaway cough up the beans for Kraft-Heinz Merger

I have referred to mergers and acquisitions a number of times during my blogposts. My interest in this business activity is that they appear to be able to create or destroy shareholder wealth quicker than any other business activity. To further reflect on my learning of the impacts of international mergers, I have decided to assess the recent deal established to merge food giants Kraft and Heinz.

The Deal

3G Capital and Berkshire Hathaway have co-operated to create a deal to merge the two companies and create a combined company that will become the 5^th largest food company in the world. But why?

Firstly, I have identified the merger as an example of a horizontal merger of two companies within similar business activity, rather than a vertical or conglomerate merger. The deal, like other horizontal mergers, is expected to create a number of synergies that create value (Sudarsanam, 2003). The increase in volume will lead to economies of scale increasing, reducing costs. This will allow the company to be more competitive on price and potentially increase market share. The deal is expected to create $1.5 billion in annual cost savings by 2017 (Armstong and Roland, 2015). The combined company will also be able to integrate their networks to drive growth of their brands in different markets. Cost savings are also likely to be made by the means of reduced headcount and the closure of less efficient manufacturing facilities.

The Price

The merger links to a number of the concepts that I have been taught on the FN0363 module, such as: capital structure and dividend policy.

The proposed deal will see the shareholders of Heinz hold a 51% stake in the combined company, with Kraft holding the remaining shares. Kraft shareholders received a one of dividend of $16.50 (costing $10 bn in total), as well as a share in the new combined entity. This has been praised by investors. With Kraft experiencing poor growth in its developed North America market, they are receiving a premium and a new share that holds the potential of a lot more value. The deal was unanimously approved by both boards of directors and the news was warmly welcomed by investors who improved Kraft’s share price by 35 pc after the announcement. This clearly indicates an intention to enhance the wealth of shareholders, and the stock market agrees. But are potential synergies the only factor that need considering as to whether a merger or acquisition is in the interests of shareholder wealth?

The impacts on capital structure also feature in the success of the merger. The deal in total will cost $45 billion and will be finance by equity. The reason for doing so has been outlined by Warren Buffett publicly. By funding the deal using equity rather than debt, the combined entity will have a stronger credit rating that will allow them greater access to debt markets. Heinz is highly geared in comparison to the less geared Kraft. By resisting using an increase in leverage to finance the deal, the combined entity will be able to refinance the debt of Heinz to a lower-yielding investment grade debt. This decision will lower the cost of capital of the combined entity (Myers, 1984). Lowering the cost of capital will further contribute to shareholder wealth maximisation. This will increase the scope of investments that can be authorised which have a positive NPV of future cash flows (Rappaport, 2006).

There are many articles that have studied the effect on shareholder wealth that mergers and acquisitions have. Many have found that this activity can actually be wealth destruction; however, I feel that each case is very unique and dependent on a complex link of many financial concepts and managerial motivations. I look forward to studying the topic further in the academic essay section of the assignment.

 

References:

Armstrong, A. & Roland, D. (2015). Heinz to merge with Kraft to create US food giant. Retrieved 23^rd April 2015 from http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11493874/Heinz-owners-acquire-Kraft-to-create-US-food-giant.html

Myers, S. C. (1984). The capital structure puzzle. The journal of finance, 39(3), 574-592. Retrieved 25^th April 2015 from Wiley Online Library http://onlinelibrary.wiley.com/doi/10.1111/j.1540-6261.1984.tb03646.x/full

Rappaport, A. (2006) Ten Ways to Create Shareholder Value, Harvard Business Review, 84 (9), pp. 66-77. Retrieved 29th March 2015 from http://cmsu2.ucmo.edu/public/classes/young/Guidance%20Research/Ten_ways_to_create_sharholders_value-Alfred_Rappaport.pdf

Sudarsanam, S. (2003). Creating Value from Mergers and Acquisitions: The Challenges. (1^st ed.) Harlow, Essex: Pearson Education

 

Assessed Blog 4: Morrisons pay the price for sticking with dividend policy

This week’s blog will be discussing the conundrum that is Dividend Policy. For decades the dividend decisions of management teams has been examined by empirical research, however, no entirely conclusive argument has been established to explain the  role of dividend policies on shareholder wealth.

The key principle of corporate finance is for the decision making of management to create value to the company’s shareholders. But do dividend payments have any impact on the share price of the business? This question has been debated since Miller and Modigliani’s (1961) paper, which regarded dividend policies as ‘irrelevant’. They argued that it was the future prospects and the productivity of the firm’s assets which determined a firm’s future earning potential, and therefore its share price. This argument may be supported by companies such as Apple and Microsoft who rarely pay dividends, but instead plough huge sums of money in to research and development. Shareholders are attracted to companies such as these, because of their future potential created by these large investments. Miller and Modigliani argue that investing in projects that increase the positive NPV cash flows of the firm will in turn increase their share price, increasing shareholder wealth. They conclude that residual cash left over, following the investment in positive NPV projects, should be given back to shareholders. Is this applicable to every firm, in every industry? The dividend policies of companies would suggest that dividends are actually relevant.

Morrison’s dividend policy has consisted of steadily increasing dividend payments yearly. The supermarket industry has changed drastically in recent years, with consumer buying behaviour changing considerably. Morrison’s performance has been affected as a result of this transformation of the market. In 2014, they once again raised their dividend despite their half-year pre-tax profits falling by over a third; a decision that raised many eyebrows as competitors Sainsbury’s and Tesco slashed their dividends to focus on reducing prices to the price conscious consumers (Thomas, 2014). The company chairman Dalton Phillips added to the news of the increased dividend, that the company was moving in the right direction and that the prospects of the firm were encouraging. But was this decision from the senior management of Morrison’s justified?

Figure 1:

Year	Interim	Full Year	Total
2014/15	4.03p	9.62p	13.65p
2013/14	3.84p	9.16p	13.0p
2012/13	3.49p	8.31p	11.80p
2011/12	3.17p	7.53p	10.70p
2010/11	1.23p	8.37p	9.60p

Morrisons (2015) from http://www.morrisons-corporate.com/investor-centre/Shareholder-information/Dividend-history/

6 months later and Morrison’s has announced that they are reducing their dividend payments to fund their current supermarkets. They have also suspended plans to open more convenience stores which are part of their strategy. Should the company have cut their dividend payments sooner? In line with Modigliani and Miller’s theory, Morrison’s should have not paid dividends until all of their potential positive NPV projects were invested in. Instead, they have now cut their dividend and suspended their projects. So why is this?

Since Miller and Modigliani’s seminal paper, other authors have gone on to discuss the impact on dividend policy that market imperfections such as taxation, information asymmetry and the interests of management.  In the case of Morrison’s, the clientele concept may be explanatory of their decision to offer stable dividends with stable growth. The clientele effect suggests that certain investors invest in specific firms with specific dividend payment policies. By keeping a stable dividend policy, there are likely to be no surprises that upset Morrison’s shareholders, causing them to sell their shareholding. However, is it always feasible to suggest that an investor would put stable dividend payments before the sustainability and prospects of the firm (which are more likely to create long-term shareholder wealth)? If Morrison’s had decreased their dividend sooner then they may not have had to cut back on the rolling out of their convenience stores; which may have recovered their performance sooner. After all, the wealth of the shareholders is likely to be greater maximised by the market valuation of their shares. Had Morrison’s invested in more positive NPV projects, then their future prospects may be greater, increasing the price of their shares. Had Morrison’s explored this tactic, their shareholders may have been able to replace official dividend payments with ‘homemade dividends’ from the sale of their shareholdings following an increase in share price (Arnold, 2013).

The dividend conundrum continues on from the previous argument for investing in projects that bring return in the future. By providing investors with their dividends now, this may please some investors who are against the risk of future dividends not coming to fruition. This ‘bird in the hand’ argument was made by Myron Gordon; however I see this as a poor concept that could actually stifle the long-term sustainability and performance of firms.

Morrison’s dividends are likely to have been used to convey messages. Unexpected changes in dividend amounts are likely to be perceived in particular ways by investors, because of the information asymmetry that exists between the management of the firm and the market. By maintaining the steady increase in dividend payment, the management of Morrison’s were attempting to shed positive light on the prospects of the firm. However, now they have cut their dividends is this indicating that the management are worried about the long term prospects? Despite the disappointment of the lower dividend, the move has underlined the company’s commitment to capital discipline (Hunter, 2015).  Had the company applied the same dividend policy despite a second year of decline then the message been conveyed to investors would be a very confused one.

The area of dividend policies in corporate finance has interested me a great deal. From reading the literature and studying the dividend policies of firms, I am no closer to understanding what an optimal dividend policy looks like. It is clear that dividends are relevant to the market, and company management teams must carefully consider the effects of their dividend policies. From studying Morrison’s, I believe that they were too slow to cut their dividends, and should have invested more in to the company operations and projects, before returning cash to their shareholders. This conclusion has been made with the added benefit of hindsight however, and the company may have had a large focus on the impact a decrease in dividends would have on shareholder confidence and share price.

References

Black, F., & Scholes, M. (1974). The effects of dividend yield and dividend policy on common stock prices and returns. Journal of financial economics, 1(1), 1-22. Retrieved 2nd April 2015 from Science Direct http://www.sciencedirect.com/science/article/pii/0304405X74900063

Miller, M. H., & Modigliani, F. (1961). Dividend policy, growth, and the valuation of shares. the Journal of Business, 34(4), 411-43. Retrieved 2nd April 2015 from JSTOR http://www.jstor.org/stable/2351143?seq=1#page_scan_tab_contents

Richardson, G., Sefcik, S. E., & Thompson, R. (1986). A test of dividend irrelevance using volume reactions to a change in dividend policy. Journal of Financial Economics, 17(2), 313-333. Retrieved 2nd April 2015 from Science Direct http://www.sciencedirect.com/science/article/pii/0304405X86900681

Ruddick, G. (2015). Morrisons to slash dividend to fund rescue plan. Retrieved from http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11455839/Morrisons-to-slash-dividend-to-fund-rescue-plan.html

 

Thomas, M. (2014). Morrisons raises dividend despite collapse in profits. Retrieved from http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11088751/Morrisons-raises-dividend-despite-collapse-in-profits.html

Assessed Blog 3: Would you Adam and Eve it… Apple valued at $1trn!

In the wake of the news that Apple’s valuation has reached $1 trillion. I feel that it is an interesting time to reflect on the valuation process that corporate managers and investors undertake. The valuation process is important for management to understand the implication of factors on share price (and shareholder wealth). It is also an important technique for managers to possess for valuing merger and acquisition targets. From studying the literature and reading articles regarding company valuations, it is evident that there is a large degree of subjectivity involved in the valuation methods used. Warren Buffett described valuing a business as ‘part art and part science’.

Apple is the largest company in the world, as measured by market capitalisation (Number of Shares X Share Value). Their share price has strengthened to just under $180 as the company has significantly improved its position in the Chinese market. As well as this promising news, Apple is on the verge of launching their new product category, the Apple Watch. The market has responded positively, and as a result the firm’s market value has increased. But is this the true value of Apple? Many would argue that this $1 tn valuation is the minimum valuation of the firm. This method of valuation can only be truly accurate if the market is truly efficient, however, information asymmetry exists and management will have essential knowledge of the firm that the public is unaware of.

So how about measuring Apple by its net assets? From Apple’s latest balance sheet, an underwhelming net asset figure of around $102bn can be calculated. This discrepancy in the two calculated values is because of the Net Asset Value (NAV) method overlooking the intangible assets that Apple possess. Arguably these assets, which include human capital, brand, and goodwill, create the most value for the firm. However, their value is nowhere to be seen on their balance sheet. Valuation based on the NAV method is better suited to valuing a company in financial difficulty when a company is considering buying the firm’s asset in a liquidation situation.

A better way to measure a firm’s value would be to calculate a value based on future income…right? Gordon’s dividend growth model is one method used to calculate a share price from the present value of expected future dividends. However, there are a number of hurdles that arise when using this technique. Predicting the growth of dividend payments of a company may be difficult for firms with volatile dividend payment patterns. Even worse, Apple (until recently) have not paid dividends, making the method impossible to use.

The price-earnings ratio of companies is a popular valuation method. The historic PER compares a firm’s share price with its latest earnings (profits). Investment analysts will have an ‘appropriate’ P/E ratio level for either a share or sector, and will also consider both risk and growth factors of the company. A value for equity is then calculated by multiplying a sustainable earnings figure by the P/E ratio (Sudarsanam, 2004). Despite this method being widely used by the investment community, it still has a number of limitations. Apple is renowned for having a lower P/E ratio than expected, thus the valuation calculated may be unreliable. There is also much scepticism regarding the accuracy of earnings figures, due to the flexibility in financial reporting, allowing companies to ‘window dress’.

A Discounted Cash Flow (DCF) Valuation method would be most appropriate for Apple, in my opinion. According to Mukherjee, Kiymaz and Baker (2004), the DCF method provides the most rational framework for valuing a business. This method forecasts the future cash flows of a business (typically post-merger, calculating the effect of synergies). In the (unlikely) event that a company should pay no more than the difference between the pre- and post-acquisition cash flows.

PVa+b – Pva  = Maximum Payment

This method considers the value attributable to shareholders created by the combined entity when working to calculate a value for a target firm. Greater likelihood is that Apple would be valued by their future cash flows. To incorporate the time value of money the cash flows are discounted. Future cash flows are difficult to estimate and are influenced by many internal and external factors. Once the subjective cash flows are calculated, a cash flow per share is calculated and then divided by the cost of equity for the firm.

So how much is Apple worth? It is recommended that each of the valuation techniques is considered in full knowledge of the weaknesses that each approach holds. From this, management can then apply their informed judgement to produce an estimated value region for the entity in question. In my opinion the market capitalisation valuation of Apple is realistic. The market is well aware of the innovation and creativity associated with Apple, as well as the strength of their brand, reflected in the inflated value of one trillion dollars.  


References

Arnold, G. (2013). Essentials of Corporate Financial Management. (2^nd ed.). Harlow, Essex: Pearson Education

Eckbo, B. E. (2009). Bidding strategies and takeover premiums: A review. Journal of Corporate Finance, 15(1), 149-178. Retrieved 12^th April 2015 from Science Direct http://www.sciencedirect.com/science/article/pii/S0929119908000953

Mukherjee, T. K., Kiymaz, H., & Baker, H. K. (2004). Merger Motives and Target Valuation: A Survey of Evidence from CFOs. Journal Of Applied Finance, 14(2), 7-24. Retrieved 16^th April 2015 from http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.196.8160&rep=rep1&type=pdf

Penman, S. H., & Sougiannis, T. (1998). A Comparison of Dividend, Cash Flow, and Earnings Approaches to Equity Valuation*. Contemporary Accounting Research, 15(3), 343-383. Retrieved 17^th April 2015 from Science Direct http://onlinelibrary.wiley.com/doi/10.1111/j.1911-3846.1998.tb00564.x/pdf

Sudarsanam, S. (2003). Creating Value from Mergers and Acquisitions: The Challenges. (1^st ed.) Harlow, Essex: Pearson Education

Assessed Blog 2: What is the Optimal Capital Structure?

The capital structure of a company is the composition of debt and equity used by the company to finance its assets (ACCA, 2009). This financing decision is a key concern for the CFO’s and leadership of firms as the capital structure of the firm can be used to create wealth for shareholders. Shareholder wealth can be achieved by creating a capital structure that decreases the Weighted Average Cost of Capital (WACC) of the firm, thus enhancing the value of the company, increasing shareholder wealth (Arnold, 2013). But what is the optimal capital structure?

British-Australian mining company, Rio Tinto, had a gearing level of 130% in 2008. However, today it has a much more conservative level of debt at around 20% (Armitage, 2014). This article will look to explain why Rio Tinto has chosen on such an enormous shift in their capital structure, and how this links to the theories covering capital structure.


In 1958, Modigliani and Miller proposed that the debt/equity level of the firm will have no impact on the value of the firm or the firm’s ability to create shareholder wealth. This argument was made considering a perfect capital market and no taxation. They argued that the level of WACC will be unchanged, as the decrease in WACC from increasing debt finance will be offset by the increase in the cost of equity caused by greater financial risk. Following heavy criticism from fellow scholars, Modigliani and Miller revised their theory to include the effect of taxation. They then found that capital raised through debt was cheaper due to tax relief, therefore they encouraged firms to maximise the amount of gearing to reduce the WACC (Modigliani and Miller, 1963).


So why do firms not become fully debt-financed? The cost of debt from lenders tends to be cheaper than the cost of equity (which comes from the required rate of return demanded by investors). However, despite initially decreasing the WACC of the firm, it has been found that increasing gearing increases the financial distress costs associated with the increased risk that debt brings. For the increased risk, equity holders demand greater returns, thus offsetting the reduction of WACC from increasing the debt finance.

Average gearing levels varies from industry to industry. Firms with reliable forecasts are better positioned to become highly geared, as there is confidence from the market that future cash flows will be achieved, and the firm will be able to service their debts (Grant, 2009). Rio Tinto had high gearing levels during a boom period for the mining industry where regular cash inflows were to be expected. The finance was used to fuel the company’s ambitious expansion plans, however, the market experienced a fall in demand and prices (Armitage, 2014).

The decline in the market has had an impact on many mining firms, and the leadership of Rio Tinto has had to reassess their capital structure. In 2013, the company was warned by credit rating agency Standard and Poor’s that their single A credit rating could be downgraded if their debt position did not improve (Financial Times, 2013). With $33bn debt in 2013, the company has since looked to reduce its debt by selling off assets and cutting costs. As well as reducing their gearing level, Rio Tinto has increased its equity capital base. Is this a positive move?


From selling off areas of the business (including their Mozambique coal assets), cutting 2,200 jobs, and only focussing investment in profitable mines, Rio Tinto reduced their net debt position by $6bn. As well as reducing their financial risk, Rio Tinto has improved their profit margins, also factoring in to their improved share price (BBC, 2014).


This case of Rio Tinto shows that Modiglinani and Miller’s (1963) proposition fails to acknowledge the risk of financial distress which is attached to increasing gearing levels. Much of the literature since Modiglinani and Miller, have discussed how the rise in financial distress costs eventually outweighs the benefit of the lower cost of debt (Arnold, 2013; Stern, 1998). In conclusion, the literature, theory and consideration of real-life businesses would suggest that there is no set optimal capital structure. Instead the capital structure of companies is likely to be dynamic, and will be dependent on the business environment that it finds itself in, as well as the current state of the firm’s operations.

 From my knowledge of capital structure, I understand that the mix of debt and equity can be used by a firm to support strategies for creating shareholder wealth. By finding the level of debt, that finds the optimal balance between the trade-offs of lower cost of capital and costs of financial distress, companies like Rio Tinto can further increase their cash flows. From lowering the WACC of the company, more projects will result in postive NPVs - creating more wealth.

References

ACCA (2009). Optimum Capital Structure. Retrieved from http://www.accaglobal.com/content/dam/acca/global/PDF-students/2012s/sa_junjul09_lynch.pdf


Armitage, J.. (2014). Rio Tinto chips $6bn off its debt mountain. Retrieved from http://www.independent.co.uk/news/business/news/rio-tinto-chips-6bn-off-its-debt-mountain-9655837.html


BBC (2014). Rio Tinto profits rise as debt and costs are lowered. Retrieved from http://www.bbc.co.uk/news/business-28685501
Grant (2009). Gearing Levels set to plummet. Retrieved from http://www.ft.com/cms/s/0/121f9a34-f7b5-11dd-a284-000077b07658.html#axzz3TbRcXbvo


Hume, N. (2013). Rio Tinto warned of a possible rating cut. Retrieved from http://www.ft.com/cms/s/0/279caad2-7fc9-11e2-8d96-00144feabdc0.html#axzz3TbRcXbvo

Modigliani, F., & Miller, M. H. (1958). The Cost of Capital, Corporation Finance and the Theory of Investment American Economic Review, 48(3), 261.

Modigliani, F., & Miller, M. H. (1963). Corporate income taxes and the cost of capital: a correction. The American economic review, 433-443.


The Economist (2014). Share Buy Backs – The Repurchase Revolution. http://www.economist.com/news/business/21616968-companies-have-been-gobbling-up-their-own-shares-exceptional-rate-there-are-good-reasons


Titman, S., & Wessels, R. (1988). The determinants of capital structure choice. The Journal of finance, 43(1), 1-19.

Assessed Blog 1: Shareholder Value Destroyer to Creator: Hewlett Packard

Are managers too obsessed with growth? Do companies who focus on increasing short-term earnings truly maximise the wealth of their shareholders?

The case of Hewlett-Packard (HP) shows how shareholder wealth can be destroyed without effective value-based management. Despite having the intentions to increase shareholder wealth, poor strategic decision making actually led to shareholder wealth destruction.

In 2002, in a bid to improve profitability, HP outsourced the manufacturing of their computers. Despite achieving lower unit costs, and investing greater in their supply chain, product development, and customer relationship management, the company suffered from a fragmented supply chain in the long-term (Mourdoukoutas, 2014). From overly-focussing on improving bottom line figures, this allowed for competitors to enter the market easily resulting in a loss of market share and sales revenue for HP (thus destroying shareholder value). This is a clear example of how focussing on profit maximisation does not necessarily improve shareholder wealth (Arnold, 2013. John Kay's views portrayed through his book 'Obliquity' (2011)closely apply to this case. He argued that profits should not be made to be the sole purpose of the business, but rather that profits are a result of applyging passion and investment in to the business' core activity. HP made the strategic decision to increase profits without analysing the wider impacts from the decision.

Rappaport (2006) states that acquisitions can create or destroy shareholder value quicker than any other corporate activity. Over the past 10 years, HP also acquired a number of companies as part of its strategic direction for growth. However, these acquisitions failed to attain growth and increase shareholder wealth. Compaq, Palm and Autonomy were all bought to enhance HP's competitiveness in growing market segments such as the mobile device market, and the emerging Asian markets. However, little innovation was created, and HP failed to make up ground, eventually writing down these companies for huge billion dollar losses (Financial Times, 2014). 

A possible reason for this failure, may be that HP's management failed to appropriately evaluate measures of P/E and EPS to evaluate the attractiveness of the deals. It is likely that managers approved deals that resulted in a greater EPS post-acquisition, rather than evaluating the long-term potential to create value (Rappaport, 2006). This should be done by estimating the present value of the resulting incremental cash flows and then deducting the acquisition fee (Seth, 1990). Dane Anderson (IT Outsourcing Analyst) concluded "HP seem to say, this looks good, lets buy it because we can buy it and we'll figure out what to do with it later" (Financial Times, 2014). This insight clearly shows that there was a lack of financial reasoning and considered value management involved in the process of the acquisitions made by HP. Had the company assessed the potential synergies more clearly then they could have calculated future cash flows of the joint entitites to assess whether the purchases were financially viable.

However, the strategic decisions of HP for various reasons were misinformed. Positive NPVs projects were not achieved and inefficiencies across the business meant that shareholder wealth was thus destroyed.

Following years of declining performance and share price, HP were one of the best performing stocks on the S&P 500 in 2014 (Mourdoukatas, 2014). New CEO, Meg Whitman, has proposed a new
strategy to break the business up in to two areas (Personal computing and printing division, and software and corporate hardware divisions) (Rushe, 2014). This decision will actually decrease HP's revenue at the expense of increasing their profit margins (Mourdoukatas, 2014). These changes will allow each division to strengthen their core business and become more flexible and responsive to the dynamic markets that they compete in. This strategic move has been praised by investors and the announcement of the restructure resulted in an increase in share price of almost 5% (Financial Times, 2014).  Activist investor Ralph Whitworth praised the deal as a "brilliant value-enhancing move" (Rushe, 2014).

Perhaps HP have learnt their lesson and have decided to better use value management tools to guide their strategic decision making and direction. Value based management holds the primary purpose of "long-term shareholder wealth maximisation" (Arnold, 2013). The objective of the firm, its systems, strategy, processes, analytical techniques, performance measurements, and culture, have as their guiding objective shareholder wealth maximisation. I believe that with the new leadership in the company, the strategic decision making has become increasingly focussed on creating sustainable long-term value with less emphasis on short-term revenue growth.

References

Arnold, G. (2013). Corporate Financial Management.(5th ed.). London:Pearson Education

Financial Times (2014). HP counts cost of ill-fated acquisitions. Retrieved 14th February 2015 from
http://www.ft.com/cms/s/0/b5ba407a-e2be-11e1-a463-00144feab49a.html#axzz3RXk8eRDm

Mourdoukoutas, P. HP's split: A sound strategy or a rabbit pulled out of a hat? Retrieved 14th February 2015 from http://www.forbes.com/sites/panosmourdoukoutas/2014/10/07/hps-split-a-sound-strategy-or-a-rabbit-pulled-out-of-a-hat/

Rappaport, A. (2006). Ten Ways to Create Shareholder Value, Harvard Business Review, 84 (9), pp. 66-77. Retrieved 14th February 2015 from http://cmsu2.ucmo.edu/public/classes/young/Guidance%20Research/Ten_ways_to_create_sharholders_value-Alfred_Rappaport.pdf

Rushe, D. (2014). Hewlett-Packard announces plans to split company in two as lay-offs continue. Retrieved from

http://www.theguardian.com/business/2014/oct/06/hewlett-packard-split-two-data-printers

Seth, A. (1990). Value creation in acquisitions: A re-examination of performance issues. Strategic Management Journal, 11 (2), 99-115. Retrieved 14th February 2015 from Wiley Online Library DOI: 10.1002/smj.4250110203