WEBVTT

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<v ->Divestitures continue to be an important tool</v>

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to raise cash and optimize corporate portfolios.

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When we at BCG look at M&amp;A deals,

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we always look at it from a value creation angle.

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Do these transactions create value for shareholders?

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To explore that, we leverage BCG's unique M&amp;A database

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of more than 800,000 transactions covering the period

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of 31 years since 1980.

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The message from our 2021 report is very clear:

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Periodic portfolio adjustments and divestitures of noncore

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assets can create substantial value for shareholders.

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To measure that, we use two indicators:

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One is the short-term announcement return, around the

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immediate day of the transaction.

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And the other one is the long-term total shareholder return

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relative to peers, which measures the value creation in the

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two years after the transactions.

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And both are up on average since 2016.

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Announcement returns for divestitures

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have more than tripled since the pandemic,

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coming from 0.2% in 2016,

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to 0.7% in the first half-year of 2021.

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And that's a highly statistically irrelevant number.

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Positive announcement returns indicate that

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currently, investors are supportive of divestitures.

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Our analysis also shows that the value creation effect of

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disposing assets is even stronger when

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A- it's a noncore asset or

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B- the asset is underperforming and

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diluting the group's margin on average.

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But sellers do not only get rewarded by short-term returns.

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The same trend can be observed in the

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two year RTSR afterwards,

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which increased from approximately 1.5% for deals announced

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in 2014, to now over 4% for those announced in 2019.