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HSE_CASE_NR: 105-051 | status: active
Authors: Willock, John
Gasiorowska, Anna (supervisor)
Material: 15 pages
Publication year: 2005  Language: eng
Keywords: Canada; divestiture; flowthrough; Gold exploration; gold mine; natural resources; oil; re-organization; separation; shares; strategy
Abstract: Matheson is facing a problem with its structure. It is an exploration and development company active in gold and oil & gas. During this time the market for natural resources commodities heated up as prices rose, reflecting a decline in production and a weakening US dollar. Demand for their output is putting a strain on management, who are beginning to feel they can no longer finance both types of different businesses under one company effectively. They are now considering a split into two separate public entities to manage and finance each resource independently. In the Canadian market they are also presented with the added incentive to use a unique “flow-through share” financing method that seems to make the split attractive. The company must consider how it would organize its human resources and redistribute assets. Government and shareholder approval would be required, and even then it may be a difficult undertaking. Would they be wise to split from a strategic or financial point of view?

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Publication year: 2005  Language: eng

Case is available from ecch case collection:
» ecch case info (73977)
[reference nr 307-190-1]