Short selling on companies that are unbundling (eg Telkom)

[Junaid_1]

How does short selling work in the case of unbundling ? I am referring to the telkom unbundling of Vodacom. If I sell Telkom short there is little risk of buying back the same number of telkom shares at a reduced price. I assume then that there is some additional constraints when short selling Telkom.

[DEP]

Are you trying to short TKG, then buy it back after the unbundling?

[SimonPB]

the unbundlign will be a neutral event to those short and long .. not with standing the possible value add or destruction that would naturally effect share prices and hence ssf prices ..

[platsak]

Wont you be short vodacom as well on the listing date. Speculation is that its listing at 30% discount. IMO rather just give the money to the SPCA.

[Junaid_1]

I am referring to selling it at the current price now and buying it back at the reduced price after unbundling, I assume that the Vodacom shares don't come with SSF contracts. My reasoning is as follows, telkom is worth +-R101 rand now. It should be worth around +-R70 after the unbundling. If I buy now and wait then the only risk I take is if the unbundling deal does not go through.(These figures are what I heard about from news articles and I don't know how accurate they are) I would expect that the ssf rules factor this in otherwise this would be a risk free transaction. I would like to know what those rules would be.

[DEP]

If you short TKG now. After the unbundling you'll have to buy back TKG plus VOD. It does not work the ways you thinking. Therefore, be careful!