LAB International (LAB) has two divisions that have significantly different strategies. The research and development department has a high amount of hazard and a continuing need for funding, while the contract research division is a cash generator and is less risky.
LABORATORY is trying to raise additional capital but considers the shares of the business are undervalued in the marketplace. It is chewing over a spinoff of one of the departments to raise the resources and to make each business more of a pure play and consequently to reach a market valuation that is more suitable. Pupils must assess the values of this strategy and place a value on the spinoff.
PUBLICATION DATE: April 20, 2009 PRODUCT #: 909N11-HCB-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
