Bidvest and Bidcorp split

Big news, Bidvest and Bidcorp started trading independently of one another yesterday. This was well telegraphed, and you should have seen it coming from quite a mile away. It always catches one by surprise however, we luckily have built systems to be able to do this real time. The only thing unknown, and will be revealed on June 1 is the ratio, i.e. the price paid of the two respective businesses. We could see already that the there was a substantial rerating of both stocks, perhaps natural buying from funds and indices, perhaps a better understanding of the separate businesses and the value unlock that everyone has been waiting for.

For each 1 share of Bidvest that you held on Friday, where the stock closed up 4 percent to 370 Rand a share, you got one Bidcorp and one Bidvest, which effectively spun the offshore foodservice business off. The Bidcorp shares traded around 300 Rand a share (closed at 304) and the Bidvest (the South African assets) traded at 118 Rand, closing at 118.59. Add them together and you get around 422 Rand. Which is a WHOLE lot higher than the 300 Rand at the Nenegate event in December, a serious uplift of value.

The shares, based on the back of the matchbox ratio that I figured (0.292 for Bidvest and the balance 0.708 for the Bidcorp) closed higher. Much higher. Bidcorp closed up around 17 percent to 304 Rand and Bidvest at 118.55 Rand, up 7 percent. Together the stock added 52 Rand from the prior close, which means as a "whole", the market gave the different divisions a collective 14 percent higher. Yowsers. Is that for real, does Mr. Market really think that the two separate companies can operate that much better from one another? We will advise shortly on what we should be doing here!