Toronto-based investment firm K.J. Harrison & Partners(KJH)has filed a shareholder resolution with Marsh & McLellan, proposing that it spin off its Mercer and Kroll subsidiaries.
It believes the breakup of Marsh is necessary to protect the value of the underlying franchises and to maximize shareholder value.
“Marsh & McLennan trades at the same price as it traded in 2004 when market participants questioned its financial viability,” says KJH’s chief executive officer, Jim Harrison. “While Mercer and Kroll remain industry leaders, they will inevitably suffer from the poor performance of the company and the associated competitive disadvantage in the market for talent.”
In a note to clients, JPMorgan Securities analyst Matthew G. Heimermann says the rationale for breaking up Marsh warrants the review of the company’s shareholders.
“Management has shown little interest in splitting up Marsh & McLennan, preferring a number of turnaround plans,” he writes. “Given that management has delivered few improvements at Marsh over the past three years, alternatives to status quo should be up for discussion.”
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