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I am not sure what the value will be but what I suspect will happen is that those holders of the parent company will be offered shares in the new food company on a compensatory basis for the drop that will ultimately happen.
I do think there is a bigger play going on in the background with Bidvest, as all previous deals have been brought into the conglomerate and managed from under that umbrella, and this is somewhat of a contrary move by the Bidvest board
The dilemma is whether to buy more Bidvest shares now or wait until after the unbundling where prices may be keener

Quote from: gcr on February 16, 2016, 02:47:10 pm

I am not sure what the value will be but what I suspect will happen is that those holders of the parent company will be offered shares in the new food company on a compensatory basis for the drop that will ultimately happen.
I do think there is a bigger play going on in the background with Bidvest, as all previous deals have been brought into the conglomerate and managed from under that umbrella, and this is somewhat of a contrary move by the Bidvest board
The dilemma is whether to buy more Bidvest shares now or wait until after the unbundling where prices may be keener

Thanks for the reply gcr.

I don't think that now ( at least for me ) would be the right time to buy BVT. It is currently on a PE of ~19-20 which for me, is too high. I have decided to wait until it gets closer to 15-16.

On your point of buying after the unbundling, I would have thought that prices would be higher following this. To me it seems that generally when something "new" happens, everyone wants to buy it.

That's the point hold off a week or two for fund managers to do their assessment as to true worth. Two companies which I can point to are Clover and Holdsport.
On the other matter of too higher a P.E rating for Bidvest don't get over concerned - if we were talking Steinhoff or Curro I would advise caution - but Bidvest apply a different business model

Quote from: gcr on February 16, 2016, 02:47:10 pm

I am not sure what the value will be but what I suspect will happen is that those holders of the parent company will be offered shares in the new food company on a compensatory basis for the drop that will ultimately happen.

Surely we will land up with the 3 separately listed, companies viz: Bidvest Foodservices; Bidvest Industrial Holdings; Bidvest Capital Proprietary.
The book value of the 2 others will naturally be 'stripped out' of Foodservices. We can then decide which of the entities we would like to hold;
maybe only Foodservices, and sell the others. I don't understand this 'compensatory' part you refer to.

I am not sure how they will restructure but here's an option that they could follow:-
Determine the value of the food industry component against the sum of the parts e.g. food segment may constitute 20% of the sum of the parts, but the holding company holds 50% for the spun off entity. Thus only 10% is available to the market. So what they could do is say that the food component represents 10% of the sum of the parts and you as a share holder of Bidvest get one share in the food operation for every 10 Bidvest shares held. This then allows the Bidvest share price to sink by the value of the shares allocated in the food segment. The other option is that they actually reduce your holding in Bidvest commensurate with the shares issued in the food section on a Rand value basis converted to a share number
This is pure speculation as to how they may handle the unbundling