S&P/ASX 200 Index (ASX: XJO) travel share Webjet Ltd (ASX: WEB) is in the red today.
The Webjet share price closed on Friday at $8.88. In morning trade on Monday, shares are changing hands for $8.83 apiece, down 0.6%.
For some context, the ASX 200 is down 0.2% at this same time.
This comes after the company updated the market on its demerger plans.
ASX 200 travel share aims to split in two
The Webjet share price is edging lower after the ASX 200 travel share reported that it continues to progress with the potential separation of its two leading travel divisions, WebBeds and Webjet B2C, via a demerger.
The company originally informed investors of its demerger plan on 22 May. At the time, managing director John Guscic said:
Having carefully weighed up the arguments for and against a demerger, the board sees significant value enhancement through a potential separation of our two industry leading businesses and brands.
Our B2C businesses will continue to deliver organic growth through the shift to online, while separation will support our WebBeds business in its relentless focus on achieving scale in all markets, in a post pandemic landscape characterised by a reduced number of smaller competitors.
In pursuing the demerger, the board noted today it expected the process would "strengthen both businesses' ability to respond to the continuously evolving travel industry, streamline capital allocation decisions and build long-term value for shareholders".
How will all this work?
If the demerger goes through, Webjet Limited shareholders will receive one Webjet B2C share for every Webjet Limited share they own, and they'll retain their shareholding in Webjet.
After the demerger, the board expects Webjet Limited (Webjet B2B), will be renamed to match its global bedbanks business, WebBeds.
Should things progress to plan, Webjet B2C will be listed on the ASX alongside Webjet B2B. The two standalone ASX-listed companies will have their own leadership positions within their respective industries.
In line with that, the ASX 200 travel share announced the appointment of Katrina Barry as CEO of Webjet B2C. An experienced technology executive, Barry has served as non-executive director of the company since 2022. She starts in her new role today.
Webjet B2B, comprising the WebBeds business post-demerger, will continue to be led by Roger Sharp as chair and John Guscic as managing director.
Management expects that both Webjet B2B and Webjet B2C will maintain net cash positions, "reflecting capital structures that provide each business with adequate funding flexibility to pursue their respective growth initiatives".
If it gains the necessary shareholder and regulatory approvals, the company expects to complete the demerger in calendar year 2024.
With today's intraday moves factored in, the Webjet share price remains up 31%% in 12 months.
