Stock market: 10 stocks that should be cut in two in 2025 – January 22, 2025 at 2:01 p.m.

The big catch-all groups are no longer in the odor of sanctity on the markets. There are still listed conglomerates, but many have already taken the step of splitting up. In the recent period, we can cite General Electric, with GE Vernova, GE Aerospace and GE Healthcare. Or even Vivendi, scattered between Havas, Louis Hachette and Canal+, after having already detached Universal Music Group a few years ago.

The conglomerate is absolute evil

A few decades ago, being exposed to multiple sectors was seen as a sign of ambition, strength and counter-cyclicality. But over time, financial markets have become less fond of these large organizations suffering from high overheads and a lack of synergies between their different activities. In financial language, we speak of a conglomerate discount, that is to say a stock market valuation lower than the sum of the parts. In other words, if we cut the group into very distinct pieces, each end would be worth more than the whole… Hence a vast movement towards simplification, with the glorification of the “pure player”, it that is to say, the company which excels in its profession without being distracted by ancillary activities.

Teasing minds might retort that new conglomerates have replaced the old ones, and they would not be wrong: Amazon is a merchant, a marketplace, a logistician, a host and a provider of technological solutions. They would not be wrong, even if in this case there are obvious synergies between all these activities. The hated conglomerate of the moment is more likely to be found in traditional sectors.

A good deal for the shareholder, really?

RBC Capital Markets calculated in 2024 that a basket of 12 industrial spinoffs grew by around 50% during the year following their creation, or almost twice the performance of an index of American industrial stocks on the same period. However, Invesco’s Spinoff ETF, focused on S&P 500 companies that have spun off certain divisions for listing, has lagged behind the S&P 500 over 10 years. It is true that splits generally occur in the industrial sector, which has underperformed the technology sector over the last decade. Over the last three years, however, the Spinoff ETF has outperformed the S&P 500, as illustrated in the following graph:

The composition of the ETF (30 positions) gives an idea of ​​the latest split operations in large American companies.

Which groups are expected to split or are rumored to be splitting up?

• Galapagos (Netherlands, $1.6 billion capitalization): the Belgian biotech listed in Amsterdam plans to split itself in two around mid-2025, with two companies listed on Euronext. Galapagos will maintain its product portfolio focusing on its cell therapy platforms, while the new entity whose name is not yet known will focus on R&D activities. Gilead, the American shareholder, will retain 25% in each of the companies. Once a star of European biotech, Galapagos fell from its pedestal after the failure of its experimental treatment for rheumatoid arthritis. The price has been divided by 9 since the peak in 2020.
• ThyssenKrupp (Germany, $2.7 billion capitalization): the old conglomerate has already started to be unraveled. The electrolyzer subsidiary has already been split under the name ThyssenKrupp Nucera. Previously, the elevators had gone to Advent and Cinven. Lately, it is the TKMS naval branch that is attracting attention. The German is still hesitating between a split and a transfer. The latest rumors indicated an interest from Deutz. A few weeks ago, the Carlyle fund had been lurking around the warship manufacturer, before giving up.
• Embracer (Sweden, $4.1 billion capitalization): the games specialist announced several months ago its wish to split into three listed entities. Embracer plans in particular to make the board and card games specialist Asmodée an independent division. The Swede bought Asmodée from PAI Partners on the basis of a valuation of €2.7 billion in 2021. PAI held the company from Eurazeo, after a buyout for €565 million. And going back again, it was Montefiore who sold Asmodée to Eurazeo in 2014 for €120 million. If all three funds have made huge swings, Embracer cannot say the same.
• Smiths Group (UK, $7.8 billion capitalization): the American activist investor Engine Capital, which holds around 2% of the round, is pushing for the sale of certain assets of the group, known in particular for its control equipment luggage and its explosive detectors or its American waterproofing division, John Crane. Smith had already sold major assets in the past, such as its medical division valued at $2.3 billion in 2021, but never went as far as a split.
• Continental (Germany, $14 billion capitalization): the split of the German group is a sea serpent for the markets. But management recently confirmed the listing of its automotive unit on the Frankfurt stock exchange by the end of 2025 and indicated that its Original Equipment Solutions (OESL) branch, which supplies rubber products to automobile manufacturers, will become independent “in the near future”, but by way of transfer.
• Hexagon (Sweden, $28 billion in capitalization): the Swedish electronics company, present in particular in metrology, plans to split its ALI (Asset Lifecycle Intelligence) division, reinforced by a few other assets (ETQ, Bricsys, etc.), which could be listed both in the United States and Sweden. This entity would focus on performance management software, while Hexagon would retain precision measurement and engineering simulation solutions. The process should be completed this year, if it is completed.
• DuPont (USA, $33 billion capitalization): the chemist announced in May 2025 its intention to split into three listed companies: electronics, water and industry. The new DuPont will consist of existing activities in protection, industrial solutions (including healthcare) and activities retained in the enterprise segment (including adhesives). The electronics company will mainly consist of existing semiconductor technologies and interconnect solutions. The 3^e entity would include water. However, DuPont announced in early 2025 that the water division will remain within the main group. The project is therefore now a separation by listing of the electronics division.
• Holcim (Switzerland, $55 billion capitalization): the cement manufacturer has publicly announced its wish to split its North American division. The entity will be completely separate and listed in New York (and in Zurich in the alternative). Holcim USA could be valued at $30 billion. The shareholders of the Swiss group must still approve it on May 14.
• Fedex (USA, $66 billion capitalization): the logistics company announced in December 2024 its desire to split its truck transport branch, Fedex Freight, a competitor to XPO or Old Dominion. A valuation of $30 to $35 billion has been circulated. The operation was expected to take up to 18 months, so it is not certain whether it will take place this year.
• Honeywell (USA, $146 billion capitalization): the American industrialist is under pressure from the most influential activist investor in favor of a split. Elliott, whose stake exceeds $5 billion within the conglomerate, opened a dialogue with management several months ago. Recently, Honeywell announced that it was examining several options, in particular a potential separation of its aerospace business. The group had already been heckled by a famous activist in the past: in 2017, Third Point, Daniel Loeb’s fund, was already campaigning for a split in the… aeronautics branch.