Toronto firm calls for spin-off of MMC subsidiaries

K.J. Harrison & Partners Inc. (KJH), a Toronto-based private client investment management firm, has filed a proposal that Marsh & McLennan Companies (MMC) Inc., the holding company of global advice and solutions providers in risk, strategy and human capital, spin off two of its subsidiaries to the control of shareholders.
The resolution was filed for inclusion at the 2008 annual meeting of shareholders. It seeks the spin off of MMC’s Kroll and Mercer subsidiaries, a statement from KJH says.
KJH owns stock and options equal to 1.1 million shares in Marsh, the Globe & Mail has reported.
“In our view, holding companies are effective only when they demonstrate that they can add value through excellence in capital allocation and management selection and retention,” said KJH CEO Jim Harrison. “Marsh & McLennan is clearly doing neither. Consequently, the share price trades 40% below our estimate of the underlying enterprises, and these enterprises are each at a disadvantage to competitors.”
Marsh is trading at the same price as it traded at in 2004, prior to Eliot Spitzer’s investigation, the company’s statement notes.
“It is now obvious that the company failed to adopt appropriate strategies and recruit the right people to repair Marsh,” Harrison added.
When contacted, an MMC spokesperson said: “The MMC board always gives consideration to shareholders and is fully committed to enhancing shareholder value.”