Webjet Shares Tumble Amid Demerger Despite Long-Term Potential

Highlights:

• Webjet Limited (ASX: WEB) shares dropped 10.815% to $7.34 after shareholders approved a major demerger of its B2C operations.
• The demerger splits the company into two ASX-listed entities, with Webjet Group Limited (ASX: WJL) managing B2C, while WEB Travel Group will focus on its B2B travel distribution business, WebBeds.
• Analysts, including UBS, are optimistic about the demerger, forecasting a potential 21.5% upside in Webjet's stock price over the next year.

At the time of writing, Webjet Limited (ASX: WEB) shares have dropped 10.815% to $7.34, as the company undergoes a significant restructuring.

What’s Behind the Drop?

Despite the sharp decline, the fall in Webjet’s share price isn’t tied to any negative updates or analyst downgrades. Instead, the decrease comes after the company’s demerger of its business-to-consumer (B2C) operations, which is being viewed positively in the long term.

Webjet shareholders recently voted in favor of splitting the company into two separate ASX-listed entities. Webjet Group Limited (ASX: WJL) will now manage the B2C division, while WEB Travel Group will focus on its business-to-business (B2B) travel distribution arm, WebBeds. Shareholders will receive one Webjet Group Limited share for every share held in the old Webjet Ltd.

The Strategic Move

The demerger aims to create two focused entities, each with distinct operating profiles and growth strategies. WEB Travel Group will continue to manage WebBeds, a global leader in B2B travel distribution, while Webjet Group Limited will oversee the B2C segment, including Webjet OTA, a leading online travel agency in Australia and New Zealand.

Is the Demerger a Win for Shareholders?

Though Webjet’s share price has fallen, this restructuring could be a value unlock. With Webjet Group Limited set to start trading at $1.25 per share, some analysts believe that the split could lead to long-term revaluation. UBS, for example, maintains a buy rating with a $10.00 price target on Webjet shares, forecasting a 21.5% upside over the next year.

The market may be cautious now, but the demerger could bring significant opportunities for shareholders in the long run.

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