An algorithm to estimate the perceived azimuth directions in a stereo signal is derived from a typical signal model. These estimated directions can then be used to separate direct and ambient signal components and to remix the original stereo track. The processing is based on the idea of a bandwise mid-side decomposition in the frequency-domain which allows an intuitive and easy to understand mathematical derivation. An implementation as a stereo to five channel upmix is able to deliver a high quality surround experience at low computational costs and demonstrates the practical applicability of the presented approach.