Will Greencore buy back all my shares and when will I get paid?

Share buyback follows exit of convenience foods producer from US market

Greencore had committed to buying back just under 37 per cent of any shareholder’s holding. Photograph: Cyril Byrne

Greencore had committed to buying back just under 37 per cent of any shareholder’s holding. Photograph: Cyril Byrne

 

I have some shares in Greencore and am trying to sell them back to the company under their return of capital. I gather the plan was approved at the agm last week but what happens now? Will they buy all of my shares and when will I get the money?

Mr DW, email

The good news is that you should get your money very soon but that you will probably be left with some shares in the company.

As you say, shareholders at the company’s agm last Tuesday voted to approve a share buyback proposal to buy up to £509 million (€567 million) worth of the company’s shares from investors at a price of 195 pence (€2.23) per share.

The measure was passed overwhelmingly at the meeting.

The buyback stems from the sudden and surprising exit of the company from the US market with the sale of its business there for $1.075 billion (€930 million) to Hearthside Foods.

The company had committed to buying back just under 37 per cent of any shareholder’s holding. But it held open the prospect of buying more depending on demand for the offer.

Shareholders had to tender the number of shares they were offering into the buyback ahead of the vote. Some, like you, would have rendered all their shares; others chose not to get involved at all.

Basic entitlement

Last Thursday, the company finished totting up the sums on the buyback and confirmed they would take what they called the “basic entitlement” – just under 37 per cent – of their full stake held by any shareholder who offered at least that amount of shares.

Those who offer less than 37 per cent of their holding had the full amount accepted.

Because not everyone agreed to get involved in the exercise – in fact quite a large number chose not to – the basic entitlement take-up fell far short of the £509 million the company was offering. So the company agreed to buy a further 74.76 per cent of any shares offered over and above the 37 per cent threshold.

In your case, where you offered your full shareholding, this means the company has agreed to buy more than 84 per cent of the Greencore shares you hold.

That means you will still have just under 16 per cent of the shares you owned when the whole process started.

And as for when you will get paid, the company is sending out cheques on Thursday, February 7th. They’ll also send you out details of how many shares you now own in the company.

It’s worth noting that, even though you tendered the shares last week and the plan was accepted by the agm, you will still qualify for the 3.37 pence a share dividend payable Tuesday on all the shares you held before the whole exercise began.

The success of the tender offer for the buyback – 13.4 per cent more than the £509 million of shares were offered by shareholders – means that there will be no special dividend for those investors who chose not to take part.

The company had originally proposed a 72 pence a share dividend but changed to a buyback under pressure from some shareholders worried about tax implications from a dividend.

The company then said it would return to the idea of a dividend if it got offers in the buyback for the full £509 million on offer.

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.