Abstract
M.Com. (Finance)
Corporate restructuring has become increasingly popular in recent years as many businesses have had to refocus on their core competencies in order to remain relevant and competitive. Despite this, the consequences of restructuring in specific business examples remain underrepresented. This study uses the documentary analysis method to examine the annual financial records of Richemont in order to determine which investments and divestments allowed the Company to restructure itself from five business areas towards a sole focus on the luxury goods market between 1988 and 2013. These investments and divestments are investigated in a chronological manner. The study further investigates a number of determinants for restructuring such as free cash flow, corporate governance and takeover threat as well as the types of restructuring: financial-, portfolio- and operational restructuring. However, in the case of Richemont, its restructuring was largely driven by changes in its business portfolio. The methods with which these restructuring are effected are also investigated. In addition to the investments and divestments that allowed Richemont to restructure, the effect of the restructuring on Richemont’s market capitalisation is also discussed. The study can further be used as a basis for future research on the liquidity effect of these transaction on Richemont.