LAB International (LAB) has two divisions which have greatly different methods. The development and research division includes a ongoing requirement for funding along with a high amount of risk, as the contract research division is really a cash generator and it is less dangerous. LAB is trying to boost additional capital but thinks the shares of the organization are underrated on the market. It's considering a spin from among the divisions to boost the funds and also to make each company much more of a pure play and for that reason to attain a far more appropriate market valuation. Students must measure the merits of the strategy and put something around the spin off.
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