US groups step up sales of non-core units US companies are shedding non-core assets at a record rate, selling underperforming units to competitors and financial sponsors as investors pressure management to streamline amid financial hardship. Divestitures account for a record 57 per cent of US mergers and acquisitions by deal value so far this year, according to Dealogic. That is up from just 42 per cent last year, and 26 per cent in 2005. High profile disposals include ConocoPhillips spinning off its $20.7bn Phillips 66 business, and Pfizer selling its infant nutrition business to Nestlé for $11.85bn. "A key driver is the major companies moving their way back to basics," said Daniel Kerstein, head of the strategic finance group at Barclays. We've seen this across industries. Companies have highlighted the fact they're going to shrink to grow. The disposals come in all forms, as companies look to maximise the value of their expendable assets. While Pfizer opted for a sale to a strategic buyer, and ConocoPhillips launched a public offering, many other companies are selling to private equity groups. Carlyle Group has been a particularly active acquirer of such units. It bought Dupont's performance coatings business for $5bn, and the Hamilton Sundstrand Industrial business from United Technologies for $3.5bn. "You have a lot of buyers," said Robert Kindler, global head of M&A for Morgan Stanley. The private equity firms can get financing. Leverage is coming back. The proportion of divestitures could be higher than usual in part because of lower overall M&A volumes. "We've seen companies more willing to do spins, IPOs and carve-outs as there's been a less robust M&A market in recent years," said Mr Kerstein. However, other factors are prompting US companies to consider more disposals than ever before. In particular, activist investors are pressuring companies with stagnant share prices to sell underperforming units in an attempt to create value for shareholders. "We've been going through a period of time, driven by activism, where companies are being rewarded by corporate clarity," said Mr Kindler. A simpler mix of businesses makes it easier for analysts and investors to value a company, giving shares a better chance of performing well. "As a general matter, if you are perceived to be a conglomerate, you will trade at a discount," said Mr Kindler. More disposals are likely to come this year. Stanley Black & Decker is selling its hardware and home improvement unit and expects to fetch about $1.5bn, according to people familiar with the matter. "Companies are streamlining so they're easier to understand from the outside, and easier to manage from the inside," said Mr Kerstein.