The Webjet Ltd (ASX: WEB) share price is falling heavily on Monday.
At the time of writing, the online travel agent and bedbank company's shares are down 12% to $7.24.
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Why is the Webjet share price being hammered?
Thankfully for shareholders, today's decline has not been driven by a bad update or a broker downgrade.
In fact, today's decline could actually be classed as good news for its shareholders.
That's because it has been caused by the demerger of its business to consumer (B2C) business into a separate listing – Webjet Group Limited (ASX: WJL) – and the renaming of Webjet Ltd to WEB Travel Group.
Earlier this month, the company's shareholders voted overwhelmingly in favour of the move, which sees them receive 1 share of Webjet Group Limited for each share they previously held.
Demerger details
Management notes that the demerger will form two independent ASX-listed companies with leadership positions in their respective industries and with their own distinct operating profiles, strategies and growth opportunities.
The existing listed company, to be renamed WEB Travel Group, will own WebBeds. It is the global business to business (B2B) travel distribution business and has been the real growth engine of the company for many years.
Whereas Webjet Group Limited will comprise its B2C businesses. This is the Webjet OTA business, which is the number one online travel agency in Australia and New Zealand, and GoSee, a global travel e-commerce group that specialises in car and motorhome rentals. Webjet B2C will also own Trip Ninja, a provider of technology that automates the highly manual process of selling complex multi-stop travel itineraries for travel intermediaries.
Are shareholders winning or losing?
At present, the new Webjet Group Limited share price is expected to open at $1.25 when it lists later today.
This is greater than the 99 cents decline by the Webjet share price today, which means that shareholders are actually gaining and not losing today.
This isn't a big surprise given that some analysts believe that the demerger is the key to unlocking value for shareholders.
One of those is UBS, which had a buy rating and $10.00 price target on Webjet's shares. Based on Friday's close price, this implied potential upside of 21.5% for investors over the next 12 months.
UBS suspects that this demerger could be the catalyst to a re-rating of Webjet's shares to higher multiples.
