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Pyueck Your calculation could be wrong be due to a massive oversight . Please see Ebay item no 274825478521 Go on you know you want to have a look. You will have to laugh ( or at least smile ).
Tom and Jerry This deal is the opposite to a rights issue. Your comment " S.P. will react and be close to the tender offer on the open market". Well said, spot on that is how it will play out in my opinion.
Printing shares ( rights issue has a very negative affect on the S.P. and the value usually ends up reducing by the same amount as the discount.) buying shares back should increase the value of the S.P. by say upto 41 p depending on number returned, in the long term 6 to 12 months in my opinion.
Have a look at just Google favion for some answers,
If only it was as simple as a cake in a tin.
Good luck everybody
If I had a share certificate 1000 shares in one pocket and a share certificate in the other pocket for 2000 shares what would I have.
Somebody else's trousers.
We will find out soon enough lets all chill and not expect to make a penny, lets just enjoy the ride.
I am in at about 100 made massive investment in January at about 75 to lower my average.
In my opinion 100 is still a good price and company looking good at the moment. I do not expect to be disappointed.
When are FGP going to get around to actually telling us how this is all going to work, let alone implementing it?
FGP’s total value/MC will fall by the amount of distribution but SP will be higher than current price due to the number of shares in circulation will be reduced upon taking the offer.
Also, SP will react and will be closed to the tender offer on the open market.
Most of the PIs including myself will take the offer immediately but IIs will continue to hold for larger gains in long term
Daimler, your logic doesn't add up. Simple example:
A cake box is worth £10 because the cake is worth £7.50 and it also has £2.50 of cash in it. The cake box is owned by 100 shares each currently are worth 10p. All shares are owned by one person. The shareholder agrees to receive 10p a share for 25 shares.
How much is the cake box worth after the shareholder received 10p a share for 25 shares? The answer is £7.50 as the £2.50 is no longer in the cake box. You were making the mistake of forgetting that (in theory) FGP's valuation should fall by the amount distributed to shareholders.
I do not think you will be limited to one hundred shares that example was just for Loofer 1.
There may be a limit regarding the number of shares you can sell at the premium price.
The premium price may be more or less than plus 41p per share,
You may have to wait for premium payment who knows .
Way I understand it is They make you an offer at 41p above market value so you sell. You can then buy one hundred shares back at market price 88.4 p.
100 shares at 129.4p = £129.40 you can buy them back same day at market price £88.40.
£41 profit for every one hundred shares you sell and then buy back.
We need the details obviously .
"favicon" have a read very unusual .
Raises more questions .
They said Autumn for distribution, that's before end of Nov by my reckoning. Before that we need the terms of distribution and process published, so in the next few weeks is when we find out hopefully.
One thing you can be sure of with First, We are going to be disappointed.
find out soon enough I hope. I don't think any timeline has been suggested yet. Meanwhile the SP slips away
Imv the II 's will not allow shares bought back to be held in treasury as FGP could in future reissue to raise capital, with appropriate agreements, this would dilute their holding and the SP. The purpose of the buyback is to return wealth to the shareholders and support a higher SP. The level of the future SP will be underpinned by future profits and subsequent dividend payments. We will find out soon enough!
Let's just think this through...
Say I have a shareholding of 100 shares, valued at £90
So ex-div the market price is say 90p and they announce 100p offer.
Everybody agrees to take up the offer so the pot of £500mn has finished, no special dividend due.
The day after ex-div, as is the norm, share price drops by the dividend/premium amount. So drops to 80p.
A week later i get payout from FGP of 41 * 100p = £41.0
Say I use cash to immediately buy 41 (41% of my original holding) shares again at 80p on the market costing £32.80 - so they're back to same holding of 100 shares.
my 100 shares @ 80p... £80 plus £8.20 cash = £88.20
My math is wrong somewhere as it doesn't look appealing??
now if FGP were to cancel all the 500m shares they bought, that would pretty much double share price
I think the buyback price will be higher than most think. The II's will have their say and may want a higher premium depending on their longer term view of future profits and distributions. Whatever way you look at it we will be getting circa 40p for every share held at the ex date.
We better hurry up with the auction before the share price dives much further
Hmm, it is certainly not a usual situation. If there is a premium set then there will have to be some sort of reverse rights issue mechanism set up. I.e. you will be allocated a certain number of shares you can sell at the set price based on the number of shares you sell, with any shares not sold in this mechanism either being offered to other shareholders, sold on the open market, or the value of these shares returned in a special dividend. There is no way they can just offer every shareholder to sell all their shares at significantly above market value, every rationale shareholder would take up the offer and if they wanted to remain a shareholder rebuy their shares on the market.
loofer - thoughtful post. I think a £1 would be the price; and i do think whether they hold in treasury or cancel is of importance.
pyueck - i do think itll be that sort of premium, which in the scale of long term holders isnt really a premium (!); if as you suggest everyone sold and then rebought, one could argue that the company had returned the money in an efficient way surely?
tomjerry - i think itll be a £1, and agree most PI's will take. I also agree that institutions will hold, but not for the reason you state. they will hold, because they see more coming down the line for a beaten up company that is now in a sweet spot of government desire to green us all. I don't think for a minute this will get taken out, because unlike say water, where the govt (controls) regulates service/price levels, without any financial input, but within doing such provides a long term fixed price framework that is attractive for institutional investors, the new management contracts of their rail franchises doesn't provide such guarentee/certainty over a 5 or 10 year time frame, certainty of earnings. because water is not discretionary, rail travel is (don't travel/ coach/car/fly).
Generally - as someone who doesn't drive, i have noticed the near normalising of public transport usage in the last couple of weeks. Today, my local train was at near normal (read overcrowded) and the Avanti west coast service was as busy as pre covid; my local buses are similarly as busy as pre covid. I don't know/understand the bus operations, but i can speak on the rail franchises. The rolling out, under the Great British Railways Shapps plan, of management contracts has a crucial impact on First. Whist potential it caps/limits profits, basically paying a mgmt fee with a potenital upside (profit lift) for reaching customer service/delivery KPI's, it also removes the risk. The astute amongst you (or just those with nothing better to do!) will have noticed in the accounts, that the return of capital, is intended to be increased, to reflect lower (already accounted) contingencies for service level failures/failures to meet franchise commitments. To put this into context, (pre current mgmt contract regime) each of the franchisees required a RINGFENCED 'bond' to cover the franchise length, bonds that across all First train franchises is pretty much equal to its current market value. potentially the mgmt contracts whilst limiting upside, also reduce the amount of dead money held against these franchises going forward. Also, the new HS2/Avanti franchise, despite reports in the height of covid of only 20% usual customers, they declared a £13 million profit for this covid year. In the last year of the previous franchisee, Virgin declared a £50 million profit. well, to my mind, in an industry where there is high fixed costs (every additional sale feeds through to the bottom line), to declare such a profit on such low customer numbers is quite astounding. This will fly.
I must admit I don't understand any of this. Is it a common thing to happen, have many other companies done this and if so what has been the outcome?
There is surely no way the premium will be that much. Everybody would take up the offer, even those wanting to stay in the stock would still take it up and re-buy on the market.
I’m expecting an offer price of 105-110p and buy back 37-40% of the company. Most of the PIs will accept the offer while IIs will hold for bigger pay off through takeover bid within a year or two IMO
So £500m divvied up equally against the 1.22bn shares in issue works out just over 40pence a share - before any costs.
My completely wild guess...
I think they would set a date as share price point, usually a few working days before the announcement, and what ever the closing/midmarket/average price was on that day. So say it was 90p/share. The £500m would only buy 555.5m shares or roughly halve of shares in issue - at that price.
They would offer a premium on that, let's say a modest 100p. That means they can only buy 500m shares, or 41% of shares in issue. I assume every holder will be able to sell 41% of their holding.
Some people would accept the offer, to sell up to 41% of their holding for premium £1
Those that don't, keep their holding and get a share of the remainder of the pot via special dividend.
The crucial thing here is will the share bought by the FGP be held in treasury or cancelled.
Big assumptions here and I could be well-off (not in the wealthy sense!)