How Unbundling Works

HOW IT WORKS: 
Unbundling

What is unbundling?

• A transaction process where shares
• of one company (unbundled company)
• are distributed by another company (unbundling company)
• to the unbundling company’s shareholders

NOTE: This process will help separate the income from each branch and allow the business to focus on the core.

What can a company sell during the unbundling?

• Assets
• Product lines
• Divisions
• Subsidiaries

Reasons why a company would unbundle?

• To create a better performing company or companies
• To offer a new variety of products or services
• To raise capital
• Distribute cash to its shareholders
• Cut down on costs
• Sell off non-essential parts of the company to optimise their main operations
• The BOD or company managers believe it will improve its current performance
• Expand options for their consumers
• To reach new consumers

EXAMPLE: 
Unbundling

Remgro, the listed investment holding company – chaired by Johann Rupert – Is going ahead with the unbundling agreement.

Remgro will unbundle its (28.2% ownership) and shares in Rand Merchant Bank Holdings (RMH) to its shareholders.

They will however, will hold on to its stake in FirstRand. Their biggest investment is 34% in FirstRand. It also owns 3.9% direct interest in the banking group, which it will keep.

Once this happens, then the shareholders will hold a direct portion in the RMH company.

With the transaction, each Remgro shareholder will receive 0.699 RMB shares for every 1 Remgro share they own.

So far, the effective date of the adjustment took place on Tuesday, 3 June 2020.