Don’t have your Nedbank ID yet?
Nedbank ID single sign-on gives you full digital access to Nedbank’s banking and lifestyle products and services on the Money app or Online Banking.
Log in
Log in to Online Banking or another one of our secured services.
Bank how and when you choose to, with the low fees or extra benefits you want.
Shop online or instore and earn rewards for it, with up to 55 days interest-free credit.
Buy foreign banknotes, transfer funds or shop globally with a travel card.
Great interest rates, with great flexibility and access to your money when you need it.
Personalised interest rates for affordable loans from R2,000 to R300,000.
Loan up to 100% of the property value or up to 105% if you are a first-time home buyer.
Choose a plan for yourself, family or build your own cover to suit your needs.
Get cover for your car, building, house contents, valuables and more.
Cover your bond, credit card, overdraft, loan and car repayments.
Take the right steps to achieve your financial goals with expert financial planning.
Plan for everything you own and owe, so your estate is in order when you’re gone.
Accounts
-
Everyday banking Safety, convenience and rewards
-
Kids accounts For children under 16
-
Youth banking For over 16s, or under 25s
-
Seniors accounts -
Private Clients For a professional banking experience
-
Private Wealth The globally integrated account
-
Digital wallet Your phone is your bank account
-
Goal saving Easy access to interest earned
- Discontinued accounts interest rates and fees
Credit cards
Digital banking
Switch to Nedbank
Fraud awareness
Forex
-
Send and receive international payments
Greenbacks
Accounts
-
On demand Money available at any time
-
In 24 hours Cash in your hand the next day
-
In 32 days Funds ready within a month
-
End of term Investments left until maturity
Investment services
Share trading
Personal loans
Home loans
Student loans
Overdrafts
Vehicle finance
Solar finance
Debt assistance
Life cover
Funeral cover
Short term insurance
Credit Life
Travel insurance
Is your business covered?
Guaranteed initial capital growth and investments
Financial planning
Estate, wills & trust services
Nedbank Private Wealth
Speak to a financial adviser
Blog
Talk to us
Find us
- Login & Register
- Online Banking
- Online Share Trading
- NetBank Business
- NedFleet
- Nedbank Greenbacks
- Nedgroup Investments
- Nedbank ID
- Bank
- Accounts
- Credit cards
- Digital banking
- Switch to Nedbank
- Fraud awareness
- Forex
- Greenbacks
- Explore Bank
- Accounts
- Everyday banking
- Kids accounts
- Youth banking
- Seniors accounts
- Private Clients
- Private Wealth
- Digital wallet
- Goal saving
- Discontinued accounts interest rates and fees
- See all accounts
- Premium banking
- Get help choosing
- Family Banking
- Refugees and asylum seekers
- FAQ
- How-to guides
- Discontinued accounts
- Everyday banking
- MiGoals Premium
- MiGoals Plus
- MiGoals
- Kids accounts
- MiGoals4Kids
- Youth banking
- MiGoals Premium
- MiGoals
- MiGoals Plus
- Seniors accounts
- MiGoals Premium senior
- MiGoals Plus
- Private Clients
- Pay-as-you-use
- Young Professionals
- Private Bundle and Private One
- Private Wealth
- Private Wealth Bundle
- Digital wallet
- MobiMoney
- Goal saving
- MyPocket
- Discontinued accounts interest rates and fees
- American Express
- Amex Gold
- Amex Platinum
- Digital banking
- Switch to Nedbank
- Fraud awareness
- Send and receive international payments
- Safe and secure incoming international payments
- Secure outgoing international payments
- To Africa
- Greenbacks
- Exclusive discounts
- FAQ
- How-to guides
- Save & Invest
- Accounts
- Investment services
- Share trading
- Explore Save & Invest
- In 24 hours
- JustInvest
- PlatinumInvest
- Tax-free Savings
- MoneyTrader
- EasyAccess Fixed Deposit
- PrimeSelect
- In 32 days
- Electronic 32Day Notice
- 32Day Notice
- End of term
- Tax-free Fixed Deposit
- Electronic Fixed Deposit
- Electronic Optimum Plus
- Platinum Fixed Deposit
- Fixed Deposit
- OptimumPlus
- Investment services
- Share trading
- Borrow
- Personal loans
- Home loans
- Student loans
- Overdrafts
- Vehicle finance
- Solar finance
- Debt assistance
- Explore Borrow
- Personal loans
- Consolidation loan
- Secondhand car loan
- Home improvement loan
- Exclusive short-term loan offers
- Explore loans
- FAQ
- How to guides
- Consolidation loan
- Secondhand car loan
- Home improvement loan
- Exclusive short-term loan offers
- Home loans
- Building loan
- Switching home loan
- Repossessed properties
- Start your home buying journey
- Solar-energy Finance
- Earn R32,000 p/m or less? See offer
- HomeVision extra funds
- Home-buying Toolkit
- Managing your home loan
- Explore home loans
- FAQ
- How to guides
- Track application
- Building loan
- Switching home loan
- Repossessed properties
- Start your home buying journey
- Solar-energy Finance
- Earn R32,000 p/m or less? See offer
- HomeVision extra funds
- Home-buying Toolkit
- Managing your home loan
- Student loans
- Explore student loans
- Overdrafts
- Vehicle finance
- Solar finance
- Debt assistance
- Consolidate all your debts into a simple loan | Nedbank
- Short-term payment relief | Nedbank
- Take charge and restructure your finances | Nedbank
- Assisted-sales solutions for homes and vehicles | Nedbank
- Flexible payment plans for loans and credit | Nedbank
- Understanding how repo rate works | Nedbank
- Consolidate all your debts into a simple loan | Nedbank
- Short-term payment relief | Nedbank
- Take charge and restructure your finances | Nedbank
- Assisted-sales solutions for homes and vehicles | Nedbank
- Flexible payment plans for loans and credit | Nedbank
- Understanding how repo rate works | Nedbank
- Insure
- Life cover
- Funeral cover
- Short term insurance
- Credit Life
- Travel insurance
- Is your business covered?
- Guaranteed initial capital growth and investments
- Explore Insure
- Life cover
- Get a call back
- Explore MyCover life
- Funeral cover
- Individual R10,000
- Individual R30,000
- Family Cover
- Build your own cover
- Get a call back
- Explore MyCover Funeral
- Individual R10,000
- Individual R30,000
- Family Cover
- Build your own cover
- Short term insurance
- Vehicle insurance
- Building insurance
- House contents insurance
- Valuables insurance
- Valuables insurance
- Get a call back
- Explore MyCover short term insurance
- Vehicle insurance
- Building insurance
- House contents insurance
- Valuables insurance
- Valuables insurance
- Credit Life
- Home loan credit life
- MFC Vehicle Finance Assurance
- Overdraft Assurance
- Balance Protection Plan
- Personal loan Assurance
- Get a call back
- Explore credit life
- Home loan credit life
- MFC Vehicle Finance Assurance
- Overdraft Assurance
- Balance Protection Plan
- Personal loan Assurance
- Travel insurance
- Is your business covered?
- Guaranteed initial capital growth and investments
- Guaranteed Growth Income Plan
- Guaranteed Growth Plan
- Get a call back
- Explore MyCover Funeral
- Guaranteed Growth Income Plan
- Guaranteed Growth Plan
- Plan
- Financial planning
- Estate, wills & trust services
- Nedbank Private Wealth
- Speak to a financial adviser
- Explore Plan
- Financial planning
- Investment planning
- Insurance planning
- Give
- Retirement planning
- Investment planning
- Insurance planning
- Give
- Retirement planning
- Estate, wills & trust services
- Will drafting
- Ensure your estate is managed by an executor | Nedbank
- Trust services
- Financial accounting
- Tax services
- Leave the admin of your estate to us, and not to your loved ones | Nedbank
- Will drafting
- Ensure your estate is managed by an executor | Nedbank
- Trust services
- Financial accounting
- Tax services
- Leave the admin of your estate to us, and not to your loved ones | Nedbank
- Nedbank Private Wealth
- Speak to a financial adviser
- Learn
- Blog
- Explore Learn
- Blog
- Contact us
- Talk to us
- Find us
- Explore Contact us
- Talk to us
- Find us
Demergers and unbundling: adding shareholder value
Demergers and unbundling: adding shareholder value
Zondi Nduli, Nedbank CIB
Posted 28/01/2022 Updated 27/11/2023 4 mins
Demergers can free up component companies to maximise shareholder value.
Mergers and acquisitions have long been a key means by which South African organisations have sought to unlock synergies, diversify their assets and offerings, and create value for their shareholders. However, over the past few years a converse trend has been visible on the JSE – several large demergers and unbundling transactions have occurred.
While the methodology is obviously different from that which investors and shareholders have become accustomed to over the years, the rationale remains the same: the maximisation of shareholder value. Unfortunately, these types of corporate actions are often looked at with an unfounded amount of suspicion or concern, with many investors incorrectly assuming that an unbundling of assets somehow implies a failure of the previously merged organisation. In most cases this simply isn’t the case, as there may be a good corporate rationale for the proposed demerger or unbundling.
4 reasons demergers can make solid business sense
Firstly, the unbundling of assets has the potential to deliver significant head office cost savings. The managed separation successfully completed a few years ago by Old Mutual plc is a case in point. The merged entity was incurring large head office costs (£130 million in 2017) through having to oversee and govern the operations of its underlying entities, including its controlling stake in Nedbank. However, all of its underlying businesses already had their own, fully functional head office structures in place.
Disinvesting purely because of an announced demerger could mean missing out on some significant value in the future
The second way in which a demerger or unbundling has the potential to enhance shareholder value is by addressing the challenges that many merged organisations inevitably face as a direct result of becoming too large in size, and in the complexity of their operations and governance. Many of these conglomerates ultimately reach an inflection point where the whole is no longer as valuable as the sum of their parts.
Alternatively, the entity may find itself being constantly discounted in the markets because it’s seen as over-diversified, unable to maximise on synergies or little more than a holding company. At this point a logical way to address the situation would be to decouple some of its assets.
A demerger is also an effective way of injecting new energy and focus into the individual businesses making up a previously merged entity, due to the newfound flexibility of removing reporting and decision-making ties with the parent company.
Numerous companies listed on the JSE are mature, with large and diversified operations. While the strategies of these organisations have proven themselves successful in delivering steady growth over the years, in modern, rapidly changing markets, many organisations are recognising the importance of innovation, focus and agility to continue driving growth. A demerger can be a very effective way of achieving these requirements for each of the underlying assets, enabling them to capitalise on opportunities that may not have been available to them under parent company restrictions.
Finally, there are a number of company-specific considerations that can make a demerger or unbundling a value-adding option. For example, by spinning off some of its underlying assets, a very large business is able to reduce its single-stock concentration risk, making it more appealing to investors or fund managers, while at the same time enhancing its trading liquidity and ultimately reducing discounts to the underlying valuation.
Analysis, foresight and the nerve to stick to long-term goals
So, while there can be many reasons for a demerger, it’s unlikely in the majority of cases that such an action is being taken because of some sort of failure of the business or any of its underlying entities. It’s far more likely that the business has recognised that a controlled demerger or unbundling of its assets is an effective means of saving costs, streamlining operations and generally adding sustainable value to shareholders.
While it is essential for any current or prospective investor in these entities to exercise the same levels of scrutiny and due diligence as they would when assessing a merger situation, avoiding unbundlings due to unfounded fears, or disinvesting purely because of an announced demerger, could mean missing out on some significant value in the future.