Unlike the last few decades when being the biggest and the largest was the default aspiration of large organisations, it seems splitting up into fragments of entities is becoming the new attraction for giant companies. Last week alone, Toshiba, GE and Johnson & Johnson announced plans to split.
Each of the companies described the split as a strategic reorganization devised to help the companies to serve their publics better.
It seems CEOs and corporate boards are finally getting the message that Wall Street does not like conglomerates because they are big and it is difficult to correctly gauge their value, a possible reason for the seeming new orientation to split.
Other companies may find that splitting into groups of independent but interconnected companies will give them greater liberty to forge business relationships that would not have made as much strategic sense if operated as part of a big conglomerate.
Many other big pharmaceutical companies including Merck and Pfizer have either already spun off into large divisions in the last few years or announced plans to do so.
AT$T is also planning to spin off Warner Media and merge it with cable and streaming giant Discovery. The deal which is expected to be sealed by mid 2022 will create a new company named Warner Bros. Discovery.
