Several ASX stocks have been trying to unlock value by divesting assets and we are likely to see more. The question is who're next in line to try to trigger a share price rally.
The Boral Limited (ASX: BLD) is one of the most recent and obvious examples. Management announced the sale of half of USG Boral for around $1.4 billion as it put its US businesses on the auction block.
Citigroup reckons the US assets could fetch as much as $2 billion, reported the Australian Financial Review.
Divestments create value for ASX stocks
Divestmenting is usually a good way to score a re-rating for ASX stocks, although that has yet to play out for Boral.
However, most analysts view potential divestments of underperforming assets in a positive light. The Link Administration Holdings Ltd (ASX: LNK) share price is one example, while the Deterra Royalties Ord Shs (ASX: DRR) spin-off from Iluka Resources Limited (ASX: ILU) is another.
There are plenty of other examples where spin-offs and divestments have created extra shareholder value, including for the Coles Group Ltd (ASX: COL) share price and Wesfarmers Ltd (ASX: WES) share price.
Divorce is better than marriage
In fact, history has shown that a divestment strategy is a more reliable way of generating superior returns for ASX stock than mergers and acquisitions (M&A).
This is why some experts are trying to predict which S&P/ASX 200 Index (Index:^AXJO) stock could be next to unlock value.
AMP share price on watch list
It appears there are a number of divestment ASX stock candidates. Bell Potter's high-profile trader Richard Coppleson ventured a guess and the AMP Limited (ASX: AMP) share price is on the list.
It's no secret that the embattled wealth manager is looking to shed more assets after selling its life insurance business in July this year. Shareholders were rewarded with a 10-cents a share fully franked dividend as a result.
The AMP share price has since slipped back to near record lows. I think it's looking good value despite the risks of repositioning the business as there are multiple levers management could pull.
Not only could management trigger a rally with more asset sales, I suspect potential suitors are running the ruler over the group.
Other ASX stocks looking to cut and run
Other stocks on Coppleson's list include the Suncorp Group Ltd (ASX: SUN) share price, Incitec Pivot Ltd (ASX: IPL) share price and Perpetual Limited (ASX: PPT) share price.
Among the small caps, the AMA Group Ltd (ASX: AMA) share price looks to be a possible candidate too. The panel beating and auto services group is struggling to return to its glory days and streamlining its divisions might just do the trick.
