Old Mutual shares are sharply higher this morning on weekend speculation that it could be broken up. The company has already responded with a teasing clarification that ‘all options’ are being considered within a previously announced strategic review, on which an update will be provided on Friday (11 Mar) in conjunction with full year 2015 earnings. While it also says that a decision has ‘yet to be made’, investors will be hoping that it’s a case of 2+2=5 with the individual assets the company (4 divisions; 40% stake in Nedbank retail, Wealth, Emerging Markets, Institutional Asset Management) being worth more on a stand-alone basis than whilst held together. Some might argue the timing is rather fortuitous just days before results, getting the shares back to the 200p mark last traded in early December. It also closes the December gap down when South Africa-exposed stocks were hurt by the ousting of the country’s finance minister, stoking scepticism among foreign investors. However, Barclays announcement that it is exiting Africa implies interest from suitors for operations in the geography and thus potential for transactions while suggestions are that Old Mutual’s wealth division is being eyed by a pair of buyout firms.

Mike van Dulken, Head of Research, 7 Mar