Per Strömberg

In the late summer of 2016, Fredrik Rystedt, the Chief Financial Officer of SCA, was busy preparing materials for the upcoming August board meeting. Recently, the management and board of SCA had initiated a discussion of whether to separate the firm's hygiene and forestry divisions into two independent companies. This would spell the end of a strategy that had been in for the past forty years, which relied on combining the firm's traditional forestry business with various downstream activities, such as production of tissue paper, diapers, and other hygiene products in a single firm. Was changing this strategy the right move? If splitting the company in two was indeed the right decision, there were important choices to be made: should one division be sold, and if so, which? Should shares in one division be sold to an industrial buyer, spun off as a dividend to shareholders, or should a minority stake be listed on the stock market? A split also required several difficult operational decisions, such as what the two management teams should look like, and how SCA's existing debt should be allocated across the new firms.