Greencore’s £509m share buyback offer oversubscribed

The share buyback offer of sandwich group Greencore has been oversubscribed, with shareholders taking up the full £509 million (€567m) on offer. However, a significant number of shareholders decided against taking part.

The company had proposed the return of value to shareholders after selling out of its US business for $1.075 billion (€930m) to American rival Hearthside Foods in a surprise move last year.

It offered to buy back just under 37 per cent of its shares at a price of £1.95 per share after abandoning an earlier plan to pay a special dividend to all shareholders of 72 pence per ordinary share.

The company changed the structure of the return of value to a share buyback following criticism from some shareholders who would have faced a significant income tax bill on the back of a special dividend.

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The 296.1 million shares offered by investors meant the offer was 13.4 per cent oversubscribed.

The company had agreed to buy back 36.9 per cent of each shareholder’s holding. Some people offered more in the expectation that other shareholders would refuse to sell.

The company said in a statement before markets opened on Thursday that it would honour in full all requests for the “individual basic entitlement” – i.e. 36.9 per cent of each applying shareholder’s stake.

“Shareholders who validly tendered in excess of their individual basic entitlement will have their tender accepted in respect of their individual basic entitlement plus approximately 74.76 per cent of the number of ordinary shares in excess of their individual basic entitlement,” the company said.

The company had said it would consider a special dividend to all shareholders in the event that the buyback failed to attract £509 million worth of shares. As a result of the oversubscription of the offer, that will not now happen.