June 28 saw the corporate breakup of News Corp (NASDAQ:NWSA), the world's 2nd largest media-entertainment conglomerate with some $34 billion in revenues worldwide.
The split took over the headlines and had investors in a tizzy.
When you own equity in a company that undergoes a corporate breakup, you may stand to earn major profits - if it's the right approach for that particular company to stimulate earnings and growth.
Money Morning's Chief Investment Strategist Keith Fitz-Gerald explains how corporate breakups can benefit - or sting - investors:
- "Many times there is a breakup premium attached to a stock when assets are worth more than the sum of their parts. The same is true of revenue streams that are suddenly freed of costs that belong to other divisions or products.
"Conversely, if a breakup goes badly, that's usually because investors find problems that weren't apparent when the entity was held whole."