It’s a little unclear to me how the mooted Middle East...

It’s a little unclear to me how the mooted Middle East restructure would operate in practice., I’m going to set out below my “best guess” as to what they might be planning, but would appreciate others correcting me if I have it quite wrong. Here is my “speculation”.

The premise is that the ME operations are growing so well that they are challenging to manage remotely. They will be “spun off” into a new company. Let’s call it “SRVME”. This company will be dual listed in Saudi Arabia and Australia. SRV will continue to trade in Australia, as a somewhat smaller company, sans the ME branches.

Shaws have estimated SRVME would have a value of $120-$170 million. That’s between one third and one half the current SRV market cap. Which suggests that market cap is too low, especially when the $100 million plus cash reserve is taken into account.

So, holders will wind up with shares in two different companies…SRV and SRVME. The latter will be managed with increased local focus going forward.
Such a restructure could “unlock” significant value in SRV not yet reflected in its share price.

It seems an exciting development to me. Is this how others see it too, or am I simply off-track?



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