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Unbundling...I dont seem to agree!!

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Mr_S
Super Contributor
its like a soccer player selling his businesses which generate spare income and have huge potential for growth, because he wanted to FOCUS on being a soccer player! i mean really..ok i would understand if its a non-profitable division, but if its making the bucks, WHY UNBUNDLE? and how does this unlock shareholder value if the share price drops like crazy? i jus dont seem to agree..
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11 REPLIES 11
Galuc
Super Contributor
I agree, to me it always smells bad when they use the word unbundling. Like Ad***** Ingram and Tiger Brands, personally I think TB were not happy with there figures or they didn't want TB name splashed on newspapers for price colluding again! Never quite makes sense to me to sell a good business without an underlying reason!
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Vano
Regular Contributor
In some instances,"unbundling" (horrid label) does make sense. In the case of the soccer player, perhaps he found that the business was demanding too much of his time, so the lack of practice was adversely affecting his performance on the soccer field. Decision time: get rid of one, or perhaps lose both. OMO
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Pam_1
Regular Contributor
Thank the large institution Yuppies for this. Its not good enough that e.g. RCH grow and pay the best divs in its class. The mandate of the pension fund is to invest in luxury goods, not tobacco. So they threaten RCH with pulling their money out. So the institutions demand unbundeling so that they (and not the RCH board) can select in which businesses they want to invest. Anglo went through the same in the last decade, spinning off FNB, Mondi, Samcar, Highveld, (even Boschendal), to become a focussed miner!!
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topgun
Super Contributor
and why is this bad?...focused businesses attract better ratings...and it allows the investor to make the diversification decisions.
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Mr_S
Super Contributor
topgun please explain then how this causes increased shareholder value as they always say as an excuse?? and where does this leave existing shareholders who loved the company as it was? the stock price drops and thats a fact! maybe u dont see it that way.. jus take a look at Barlows right now.. u telling me the unbundling of PPC was GOOD for previous Barlows shareholders?
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doomsdayza
Super Contributor
didn't you get some shares in PPC after the BAW unbundling which added up to pretty much the BAW value before unbundling?
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Mr_S
Super Contributor
oh ya, my bad sorry, i completely forgot abt that.. but thats not my point, what good, sensible reason did they have to unbundle PPC? im making specific reference to Barlows itself..cos PPC was and still is a cash cow..there are many other examples
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Not applicable
All this unbundeling is simply to satisfy the bright young boys' urge to fiddle with a winning formula. No M&A activity? well lets "Unlock some value"...etc etc. Just an excuse to allow teh top dogs with share options to cream it in fees & extra shares. I agree all the unbundeling has done is to weaken good companies, that were diversified for a reason & allowed a greedy few to hide their controlling stakes, unduly enriching themselves.....omho
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topgun
Super Contributor
It will be nice if we can work with some actual case studies here...otherwise merely unsubstantiated opinions.
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Mr_S
Super Contributor
topgun ive made specific reference to Barlows..
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topgun
Super Contributor
I still do not understand your argument...as a Barlows shareholder you received PPC shares in proportion to your holding at the time of unbundling - PPC only contributed divs to Barlows and now you are receiving it directly. The Barlows balance sheet doesn't need PPC and it added little to PPC strategically and vice versa.
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