The board of directors of Dawood Hercules Chemicals Ltd.announced de-merger by separating its fertilizer undertaking withthe rest. Dawood Hercules Chemical Ltd. has decided to demerge its
business into two companies such that the name of the company will be changed to Dawood Hercules Corporation Ltd. and its fertilizer business will be separated as a solely owned subsidiary to
be named DH Fertilizers Ltd. The rational behind de-merger is mainly that parts are greater than the whole. This form of restructuring allows subsidiaries to raise additional equity funds. Therefore we feel that Dawood Fertilizer will raise capital form the general public just after acquiring a legal status as a subsidiary company of Dawood Hercules Corporation.Raising equity funds through subsidiaries in the form of public offering is a corporate re-structuring called carving out. Carving-out unlocks the hidden value of one of the company's subsidiaries.
No comments:
Post a Comment