The announcement that the Swedish industrial, Atlas Copco is spilting into two is just the latest in an industrial trend that has grown in the last few years; namely that the traditional industrial conglomerate, epitomised by the Hanson ad in the 90s, is a thing of the past.
Being niche and specialist, even if 'niche' is big, is the mantra adopted by activists around the world. Last year we saw Alco split into two. This followed Johnson Controls spinning its automotive business and then merging with Tyco; 'Shareholder value is created by focus', or so the mantra goes.
There is no doubt as technology advances a business with many divisions will see variance in talent between divisions and growth in some and less growth in others.
The industrial spins we have seen can often be justified on the divergence of the divisions; on the face of it the Atlas announcement has strong logic.
In the past diversified income from divisions in different parts of the business cycle was seen as a strength, but with consolidation, globalisation and technological advance diversification is no longer seen as a benefit.
Which leads onto what is happening in tech companies. There we are seeing the reverse with tech giants looking to diversify and enter new markets/ product lines so that the traditional software technology company may now have as much bricks as clicks.
Maybe come 2025 we will see these tech companies also splitting and spinning - watch this space.
Atlas Copco announces split as chief resigns