Merger and Acquisition
Intercontinental Hotel Group Timeshare Business spin-off
To spin off is to come up with a new independent firm by selling or distributing new shares in an already existing venture or dividing the mother company (“Mergers and Acquisitions,” 2004). A spin-off is one type of divestment (“Mergers and Acquisitions,” 2004). A business that wishes to rationalize its operations usually gets rid of the less profitable units by selling them off as spin-offs. For instance, a company might decide to sell off one of its fully developed business units if they are experiencing trouble growing (“Mergers and Acquisitions,” 2004). This is to help the company focus more on the rest of the units that are doing well. This paper tackles the factors around spin-offs and whether or not intercontinental hotel should proceed with its spin-off plan.
Spin-offs come with their fair share of advantages as well as disadvantages. Taking all those into consideration, I would advise the manager to carry on with his idea. The separation of the timeshare business from the rest of the group’s businesses would help the group raise more “equity funds.” This spin-off is also likely to boost the group’s rating in more than one way. The sale of the timeshare business could, for instance, give stronger incentives to the employees of the separating entity. It will also take some weight off the Intercontinental Hotel Group’s manager as they will be able to focus on fe…
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