Derailed demerger plan leaves GE Shipping at sea.
Economic Times (New Delhi, India), August, 2006
Aug. 4--The stock markets were disappointed at GE Shipping's proposed demerger of its offshore business falling through. The scrip closed 1.2 percent down at Rs 221, after falling to a low of Rs 207.
The setback will mean that investors, who were expecting shares of the offshore company, will now have to wait.
Since status quo prevails, the business will operate as usual, and performance will not get affected.
However, shareholders would have benefited more by getting shares of the offshore company, as they would hold shares in a shipping company as well as an offshore firm.
The benefit, as in most demergers, is that both businesses get different multiples. Offshore oil field services companies quote at P/E multiples of 15-40 times...
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