So could you point us to your source of information, which says that shareholders are paying twice? That's not what the company says ...
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Already answered Black Peter by posts above. Its my take on what has been announced to date on how the spinoffs usually work.
Macduffy, sure I agree there isn't enough detail, but that's how I interpret what they have put out to date.
How does the new company get funded otherwise?
My other main question is what happens to the significant amount of debt that is related to the spun out assets?
Does it say within BHP in its entirety or does some get apportioned to the new entity.
I would suggest all debt stays with BHP, but that's just speculation on my part.
FWIW, Morningstar have a preliminary fair value estimate of $1.50 - $2.00 for South32 and a corresponding reduction for BHP, based on an estimate of 5% of BHP's fair value estimate. Seems as good a guesstimate as any! The rest of the article is behind a paywall so if anyone has access......?
So $1.50 -$2 of BHPs SP? So they are valuing the new entity in the region of $10Bln by the sounds.
Going on Morningstar's $1.50-$2.00, rightly or wrongly, and the 3.211b issued shares disclosed in the latest annual report, I calculate South32's theoretical "fair value estimate" at $4.81B - $6.42B. Other guesses welcome!
Incidentally, BHP's SP is up nearly 2% today.
:)