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Best of the Best Plc (LSE:BEST) shares sky-rocketed on Friday morning following an RNS announcement of tender offer and general meeting.
The company aims to return cash to shareholders through the use of this tender offer, through which Charles Stanley Securities will purchase up to 1 out of every 6 ordinary shares (or 16.67%) at 63 pence per share, a rather large premium over the current price. These ordinary shares are then to be purchased by the company from Charles Stanley pursuant to a repurchase agreement.
If the full amount of shares under the tender offer are acquired, the shareholders will be distributed a total of £1,180,884. Information on the terms and conditions of the tender offer, along with instructions for shareholders on how to tender their shares is due to be released later today.
Reasons for the Tender Offer Proposal
The board believes that it is in the best interests of the shareholders to implement this tender offer, as it will allow those who wish to sell their shares to do so. The business has been generating cash for years and has consistently had a strong balance sheet and large cash reserves, according to the board. These positive results, mixed with a reduction in capital expenditure and stock on display required at new retail outlets, has given the company a cash surplus over the required costs of the business.
Benefits of the Tender Offer
In the RNS statement, a spokesman for Best of the Best stated, “The Board has considered a range of options for returning cash to Shareholders but decided to do this byway of the Tender Offer because it believes this process benefits both Qualifying Shareholders and the Company.”
The directors shared a list of benefits for the implementation of this proposal, claiming that this is the best way to make the capital distributions in a way that all shareholders can benefit from. The statement also claimed that the proposal allows those who do not wish to receive capital to maintain their investment in the company. It will also immediately increase the company’s earnings per share.
The release of this news boosted Best of the Best shares, sending them as high as 58.5 p on the day, from an opening price of 27.5 p. In early afternoon trading, shares were up just under 100% before settling down a bit later in the day.
Company Spotlight
Best of the Best was established in 2000 by William Hindmarch. It is a UK company quoted on the AIM that runs competitions to win prizes, primarily cars. Their 2010 profits were £340,972 from a revenue of just under £7.3 million.
References
↑ About Best of the Best
↑ Best of the Best Annual Report
