| HBS Case Collection
NEC Electronics (CW)
Why do shares in NEC Electronics, a publicly listed subsidiary of Japan conglomerate NEC trade at a discount to their fundamental value? Can Perry Capital, a U.S. hedge fund, restructure this subsidiary and generate significant returns? This case provides students with an opportunity to analyze Perry's decision to invest in NEC Electronics. In doing so, it asks for the reasons that NEC might take actions that destroy value and shift value away from NECE's minority shareholders. The events covered allow for a discussion of how ownership concentration constrains restructuring alternatives, how hedge fund investors might confront controlling shareholders, and how the mis-pricing of agency costs can give rise to ownership structures that allow for minority shareholder expropriation.
Keywords: Business Conglomerates;
Business and Shareholder Relations;
Foley, C. Fritz, Robin Greenwood, and James Quinn. "NEC Electronics (CW)." Harvard Business School Spreadsheet Supplement 209-711, November 2008.