Dewhurst Share Discussion Threads

[profdoc] 06/8/2021 09:52

Thank you Coolen - that sounds more like it. It is still a mystery as to why some buyers have been willing to pay such a premium for the voters (and it can't be a current large holder because they have to declare any 1% increase in holdings)

[coolen] 05/8/2021 18:00

If I remember correctly, at Cakebread Robey (which had a similar capital structure) the non-voters nodded through a scheme whereby, although the voters received a scrip issue, the non-voters received a hefty special dividend and were enfranchised, thus creating a single class of capital. Still family controlled (through the scrip issue) but with the "A" holders now enfranchised and with cash in their pockets.

[profdoc] 05/8/2021 10:18

Gengulphus: I'm blown away by your erudition - that was a brilliant piece of investigation, logic and prose. Thank you very much - it clarifies the position beautifully. That raises the question (again) of why purchase voting shares if you have no control of the company given the family's entrenched position and your economic position is a fraction of the non-voters.

[arthur_lame_stocks] 04/8/2021 10:17

Excellent research Gengulphus.

[gengulphus] 04/8/2021 09:33

Just to argue against myself: non-voters are 57% of all shares. If both classes traded at say £10 then each share has an equal claim on earnings. However if the non-voters end up with a only a say 26% claim on overall earnings. That could indeed be a problem. Hmm. Each share does have an equal claim on earnings: the company's Articles of Association ( https://www.dewhurst.plc.uk/wp-content/uploads/Articles-of-Association.pdf ) basically say that in their section 6.1.3, by saying that both dividends and returned capital must be paid in equal amounts per share. That isn't affected by the market price of the shares: DWHT shares are priced higher than DWHA shares because they have voting rights and the DWHA shares don't, not because they have any greater claim on earnings. Or to be precise, it's not that DWHA shares have no voting rights, but that they have extremely limited voting rights: section 8.1 of the Articles of Association says: "Subject to the provisions of the Statutes, any proposed variation or abrogation of the rights attached to the A Ordinary Shares, whether or not the Company is being wound up, which would result in such rights not ranking pari passu with the rights attaching to the Ordinary Shares (save in respect of voting) shall only be effective if made with the consent in writing of the holders of not less than three-quarters in nominal value of the issued A Ordinary Shares or with the sanction of a special resolution passed at a separate general meeting of the holders of the A Ordinary Shares (but not otherwise) and for this purpose alone the holders of the A Ordinary Shares shall have the right to vote at such separate general meeting." The gist of which is that if any company proposal to alter the fact that each share has an equal claim on earnings can only go through if the DWHA shareholders approve it separately from the DWHT shareholders (and they can vote about it despite normally being non-voters). This is of course an important safeguard for DWHA shareholders - without it, the DWHT shareholders could push through changes to section 6.1.3 to give themselves greater claims to the company's earnings at the expense of the DWHA shareholders without the latter being able to do anything about it. That includes any proposal to consolidate the two classes of share unless it's done on a straight 1-for-1 basis, and also any proposal to amend the Articles of Association by altering that section 8.1 safeguard. Of course, any proposed consolidation is extremely unlikely to be on a 1-for-1 basis - that would involve the DWHT shareholders (and the Dewhurst family in particular) giving up control of the company for no benefit to themselves. But they'll have to get the DWHA shareholders' consent to the amount of benefit they get to compensate them for their loss of company control - otherwise the consolidation won't go through. Equally, though, I should amend my statement in my last post that "And with the share price ratio currently being about 4 times, you'd expect their fractions of the consolidated share capital to be in the ratio 4:1.44, or about 73.5%:26.5%.". My thinking at the time I made it was influenced by what I know of the Takeover Code: its Rule 14 basically requires that a bidder for Dewhurst splits their offer between the two classes on that sort of basis. But would a consolidation on that sort of basis pass its vote at a meeting of DWHA shareholders? I doubt it... So I think a realistic consolidation proposal would have to be on some sort of compromise basis between "1 DWHT share = 1 DWHA share" (which will clearly be unacceptable to DWHT shareholders) and "1 DWHT share = ~4 DWHA shares" (which I very much doubt would be acceptable to DWHA shareholders) if it's to stand any chance of being approved by both DWHT and DWHA shareholders. (And just to be clear, it would need approval by separate meetings of the two classes of shareholder: DWHT shareholders won't be able to vote in the DWHA meeting any more than DWHA shareholders can vote in the DWHT meeting). But whether there is such a compromise to be found, I don't know, nor do I have any idea what its basis would be if it could. Gengulphus

[arthur_lame_stocks] 30/7/2021 10:12

Hi Glen The non voters would be significantly worse off if a consolidation were to take place today on the terms Gengulphus has highlighted.

[profdoc] 30/7/2021 10:11

Just to argue against myself: non-voters are 57% of all shares. If both classes traded at say £10 then each share has an equal claim on earnings. However if the non-voters end up with a only a say 26% claim on overall earnings. That could indeed be a problem. Hmm.

[profdoc] 30/7/2021 09:59

Thank you Arthur - I see your point. But who has been buying the voters. If it's a family member or other major shareholders wouldn't they have to issue a notice if they buy an additional 1%? At 24% - 26% of overall Mcap (thanks Gengulphus) the current non-voters end up in about the same economic position as now? Or have I got that wrong? Glen

[tanners] 30/7/2021 08:10

coolen - Cakebread Robey was another example of value disparity being attached to non voting shares; in that case when taken over by Jewson some 20 years ago. Ironically I seem to recall that being discussed as a case in point on one of the Dewhurst threads some time ago.

[arthur_lame_stocks] 30/7/2021 07:03

Hi Gengulphus. Thanks for that, I always thought there were an equal number of voting and non voting shares.

[gengulphus] 30/7/2021 00:15

Typically at Dewhurst the voting shares have traded at around twice the price of the non voting shares so you would expect them to get around 66% of the consolidated share capital with the non voting shares getting the rest. Currently the ratio is around 4 times the price of the non voting shares so you would expect them to get around 80% of the shares. It's a bit more complicated than that, because there are about 44% more non-voting shares in issue than voting shares. So with voting shares typically being about twice the price of non-voting shares, you would expect their fractions of the consolidated capital to be in the ratio 2:1.44, or about 58%:42%. And with the share price ratio currently being about 4 times, you'd expect their fractions of the consolidated share capital to be in the ratio 4:1.44, or about 73.5%:26.5%. Gengulphus

[coolen] 29/7/2021 22:35

Arthur, thank you. Very well explained.

[arthur_lame_stocks] 28/7/2021 11:48

Hi Glen Because they have two classes of share, the voting and the non voting, they may choose to consolidate these into one class of share which may make them more appealing to investors generally. If this happens they will have to choose who gets what percentage of the company after the consolidation bearing in mind that the voting shares should have an intrinsically higher value than the non. Typically at Dewhurst the voting shares have traded at around twice the price of the non voting shares so you would expect them to get around 66% of the consolidated share capital with the non voting shares getting the rest. Currently the ratio is around 4 times the price of the non voting shares so you would expect them to get around 80% of the shares. I saw a similar thing happen at BLEY which admittedly was never run with the minority holders in mind. I have no idea whether something of this nature is going to happen but it is strange that this price differential has suddenly opened up.

[profdoc] 28/7/2021 10:02

Arthur, Could you explain how this would work. I'm not familiar with the issue. Thanks

[arthur_lame_stocks] 27/7/2021 12:44

I'm wondering whether the growth in the voting shares and the stagnation in the non voting shares is because they're planning a share consolidation on unfavourable terms for the non voting shares as happened at CH Bailey.

[18bt] 19/1/2021 11:00

Staggering increase since the start of the year continues...

[bench2] 15/1/2021 12:44

Big move in Dewhurst and DWHA ..... , Annual Report arrived today , I will check later to see if anything extra to account for the move ... IC is getting a bigger following but is there something else driving the share price ? The gap between the Ords and A shares is now the widest I have seen . Obviously a tight market in the Ords with no family sellers . Any thoughts welcome

[energeticbacker] 14/12/2020 11:05

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[bench2] 30/11/2018 12:14

The last 3 years the Final Results have been announced on the first Tuesday in December ...... So hopefully on 4 Dec 2018

[arthur_lame_stocks] 24/7/2018 20:42

I wonder if the family are planning to consolidate the shares into one class and the increasing premium of the voting shares isn't by way of manipulation to ensure they control as much of the company as possible after it happens?

[danieldanj] 10/6/2018 03:29

Dewhurst (DWHT) Earnings-Reaction to Keep an Eye http://crweworld.com/Earnings-Calendar

[simonlala] 11/4/2018 11:08

Quick question guys - Why is the spread so wide on Dewhurst? 1100 / 1200 ?

[topvest] 12/2/2017 18:21

Agreed, although if there was a takeover non-voting shares would no doubt receive less. I bought non voting shares myself though as they were better value.