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About two-thirds of top executives at the world’s largest companies expect increasing “spinoff” activity over the next year, according to a study by London-based Allen & Overy. Among survey respondents, 66% expect an active environment for spinoffs, or creations of new corporate entities from company divisions, in their industry, and 87% expect hedge funds and activist investors to influence spinoff activity. Mainland Europe and Asia-Pacific are projected as hotspots for spinoff growth. Sixty-one percent of respondents said tax issues are the major barrier to potential spinoffs, while 34% pegged pension obligations. As shareholders become increasingly active, companies are under growing pressure to demonstrate synergies from their mergers and acquisitions activity, said Richard Cranfield, the global head of M&A at Allen & Overy. “This is where spinoffs are seen as adding critical shareholder value by allowing management to rationalize those company divisions or product areas that do not fit optimally within the larger, evolving corporate structure,” he said. Allen & Overy hired the Financial Times Group’s market research arm to survey 100 executives, split between Fortune 500 companies and FTSE 350 companies � the largest 350 companies on the London Stock Exchange.

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