The Dermerger of Six Continents PLC (A) Harvard Case Solution & Analysis

During the latter stages of the year 2002, Six Continents PLC (6C) declared plans for the separation of its hotels business from the pubs and eateries company, to be renamed InterContinental Hotels Group and Mitchells & Butlers respectively.

UK-recorded 6C was among the top international hospitality groups managing and running more than 3,000 hotels worldwide including the Holiday Inn, Crowne Plaza and InterContinental brands, as well as over 2,000 pubs, taverns and restaurants in the UK and Germany.

Tim Clarke, 6C's Group Chief Executive, considered a demerger to foster the business's growth strategies as well as improve shareholder value. However, a slowing economy, the aftermath of the New York terrorist attacks of September 11, 2001, and its impact on the global travel business were factors contributing to shareholders' dilemma on the proposed spin-off, which was set against a backdrop of intense merger and acquisition activity in the industry.

The case investigates the business and fiscal strategic dilemmas of a demerger, influences of the outside environment and assesses the costs and advantages that shareholders may derive from the judgement.

It provides an opportunity for discussion on the benefits and drawbacks of a divestiture business strategy, the challenges and practicality of raising capital during tumultuous market states, and if 6C management was leading the Group in the appropriate strategic direction to split the company into independent things.

Publication Date: 06/14/2011

This is just an excerpt. This case is about Finance

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