BHP Billiton Limited (ASX: BHP) shares have fallen 5.7% today to trade at $30.64, with the stock now trading ex-South32 Ltd (ASX: S32).
As we highlighted last week, Friday was the last day investors could purchase shares in BHP Billiton for rights to a stake in its promising spin-off business. BHP Billiton is now billions of dollars' worth of assets lighter, while South32 will begin trading on the ASX as of midday today (Sydney time) as a separately listed entity.
Given the difficulty analysts have experienced in trying to value South32, the listing could certainly prove to be volatile. According to various reports, the stock is expected to trade between a very wide range of $2 to $3.50 per share, with some experts ascribing a market value of US$7 billion, while others are suggesting a value of US$15 billion is more appropriate.
Should the stock trade at the lower end of that range, it could certainly be a good time for retail investors to begin building a position to benefit from its cost-cutting initiatives over the coming years.
BHP Billiton is also expected to benefit from the demerger given that it will now be able to focus solely on its core operations, being iron ore, coal, petroleum, copper and, to a lesser extent, potash. Given the strong headwinds facing some of those commodities however, investors may be wise to avoid BHP Billiton's shares, for now.
