Question
On February 28 2019, Gap Inc announced that it would split into two companies, in effect spinning off its Old Navy Brand, which had been
On February 28 2019, Gap Inc announced that it would split into two companies, in effect spinning off its Old Navy Brand, which had been its most profitable division for a long time. Investors had demanded the split, and quickly rewarded it by a huge uptick in the company's stock-price.
Please perform a thought experiment. Would the market similarly reward Apple in 2023 if it announced that it was spinning off its IPhone Division? Why or why not?
Also, aside from the stock market implications, is this a good strategy from a business standpoint? Remember, that if the split had happened, Banana Republic and Gap stores would have become two different companies, and would not have been able to combine resources, such as real estate deals, distribution, contractor-relations and IT.
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