Remgro shares in steep dive

Value declines by more than R11bn on RMB decision to offer Remgro stake to shareholders

JSE-LISTED investment holding company Remgro shaved billions off its market capitalisation after tumbling nearly 25 percent on the JSE yesterday as shareholders digested the planned unbundling of RMB Holdings from the group.

The company saw its total value declining by more than R11 billion on RMB’s decision to offer its stake in Remgro to shareholders as part of its decision to reduce its exposure and to consolidate its investment portfolio.

Remgro said it would distribute 397.45 million ordinary shares to all the Remgro shareholders.

The unbundling meant that Remgro shareholders would receive 0.69939 RMH shares for every Remgro share.

Citadel trader Jordan Weir said the shares slump was driven by shareholders processing the unbundling of RMB from Remgro.

“The movement in the share price then reflected ‘ex’ entitlement to receive the unbundled RMH shares. Having stripped out the impact of the unbundling, Remgro’s share price then rebounded, and was up over 3 percent by lunchtime yesterday,” Weir said.

The move comes after RMH shareholders gave its management the go-ahead to unbundle its 34.1 percent stake in FirstRand and to unlock about R5.41bn in value for its shareholders.

RMH is the founding and largest shareholder in FirstRand and the unbundling will result in the companies ending a 27-year-old relationship.

RMH’s chief executive Herman Bosman would step down from the various boards of FirstRand at the end of June after the completion of the unbundling.

In March, Remgro reported a 0.4 percent decline in headline earnings to R4.24bn, while headline earnings per share fell by 0.2 percent to 750.9 cents a share for the six months to end December.

In April, Remgro indicated that it would keep its 3.9 percent stake in financial services group FirstRand after unbundling its shares in RMH.

Remgro has more than 30 investee companies in its portfolio, which includes Mediclinic International, Distell, FirstRand and Grindrod.

Nesan Nair, a senior portfolio manager at Sasfin Securities, agreed that the decline has to do with the unbundling of RBH shares. “The 24 percent drop represents the +/- R40 value shareholders received in RMH shares, 0.7 percent of an RMH share,” Nair said. Remgro closed 22.80 percent lower at R110.80 on the JSE yesterday.