While Siemens initially withdrew an IPO for its Osram unit in 2011 citing a dubious economic climate, the German corporation is now testing its feet in the water via a divestiture of the entity. As reported by the Wall Street Journal, shares of the new c

The immediate concern is a sell off, because as one unnamed manager at a German investment fund succinctly told the Wall Street Journal, “If Siemens doesn't want to own Osram, why should it be attractive to outside investors?”

mentioned that the separation strips Osram of the blue chip status it had under Siemens. This could be the largest single reason that index funds and other conservative investors will most likely expel the stocks from their portfolios, for it fosters a sense of instability that many are not comfortable with. Although Morgan Stanley analyst Ben Uglow

Siemens' decision to divest from Osram as, “strategically sound”, the move has the potential to draw unwanted criticism that could harm the corporation's reputation in the long run. As Daniel Bauer of shareholder-protection group SdK told the Wall Street Journal, Siemens would not like to leave the process with a reputation for solely “[divesting] shaky enterprises”. Ideally, it would like to complete the divestiture with a positive reputation for what the Wall Street Journal calls “executing effectively a streamlining strategy”. It's especially important to maintain this persona during these times of economic distress, because investor confidence is often tied to a corporation's strategic response to economic hardships.