LAB International Inc.
LAB International (LAB) has two divisions that have vastly different strategies. The research and development division has a continuing need for funding and a high degree of risk, while the contract research division is a cash generator and is less risky. LAB is attempting to raise additional capital but believes that the shares of the company are undervalued in the market. It is contemplating a spinoff of one of the divisions to raise the funds and to make each company more of a pure play and therefore to achieve a more appropriate market valuation. Students must assess the merits of this strategy and place a value on the spinoff.
Collection: Ivey Business School (Canada)
Ref: IVEY-9B09N011-E
Format: PDF
Number of pages: 23
Publication Date: May 14, 2009
Language: English
What material is included in this case:
Description
LAB International (LAB) has two divisions that have vastly different strategies. The research and development division has a continuing need for funding and a high degree of risk, while the contract research division is a cash generator and is less risky. LAB is attempting to raise additional capital but believes that the shares of the company are undervalued in the market. It is contemplating a spinoff of one of the divisions to raise the funds and to make each company more of a pure play and therefore to achieve a more appropriate market valuation. Students must assess the merits of this strategy and place a value on the spinoff.
Read more
Year: 2006
Geographic Setting: Canada
Industry Setting: Manufacturing;
Leave your rating
"LAB International Inc."
Register for free with IESE Publishing and enjoy all the advantages
What type of account do you want to create?
Choose account type
Professors
Academic Institutions
Companies
Individuals