Reward deferred for Greencore shareholders who snubbed buyback

Q&A: Dominic Coyle answers your personal finance questions

Greencore proposed the return of value to shareholders after selling out of its US business for $1.075 billion  to American rival Hearthside Foods in a surprise move last year. Photograph: Cyril Byrne

Greencore proposed the return of value to shareholders after selling out of its US business for $1.075 billion to American rival Hearthside Foods in a surprise move last year. Photograph: Cyril Byrne

 

I was wondering if there will be a special dividend to those people who didn’t participate in the Greencore tender offer.

Regards

Mr D.L., email

I am assuming you are talking about the Greencore return of value – I inserted that company’s name into your question as you did not identify which particular one you were referring to and it is the most recent of these exercises and the one where there was some confusion over the possibility of a special dividend.

If so, the answer, depressingly for you, is no.

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

Initially, it proposed a special dividend of 72 pence per share which would have seen all shareholders benefit. But, under pressure from some larger shareholders concerned about a big tax bill that such a dividend would trigger, the company opted instead to launch a share buyback.

Undersubscribed

It offered to buy back just under 37 per cent of its shares at a price of £1.95 per share. It did say that if the offer was undersubscribed, it would return to consider the possibility of a special dividend with the balance of the buyback fund.

In the event, the Greencore buyback was oversubscribed, with shareholders taking up the full £509 million (€567 million) on offer.

That, unfortunately, means no windfall for you and the many other shareholders who decided against selling their shares. The upside, of course, is that your retained shares now account for a larger share of the company – roughly 58 per cent more as the roughly 63 per cent of the shares that were not sold now account for 100 per cent of its market capitalisation.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice

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