Legal & General Share Discussion Threads

[kirkie001] 18/9/2024 09:19

Cala deal doesn't sound magnificent to me. They've basically sold it for NAV, with £500m being up front and £650m being paid over the course of the next 5 years. Don't see the payment profile in the headline, but let's discount the £650m back to £500m in present day terms.

So, sounds like they'll be showing a pretty large loss of say £150m in the FY24 results for this, if the NAV was £1.15bn?

The buyer has basically got the operating profits for free (in exchange for assuming £200m of debt?). (unless I'm double counting the debt - need to have another coffee).

But this doesn't seem to do much positive for LGEN other than "get rid of a non-core asset that they don't want".

I wonder if there's any tie in on contracts included? The original purpose of buying Cala was to have an in-house (sorry!) property company to do their Build to Rent to back their annuity cashflows.. that need hasn't gone away.

[tuftymatt] 18/9/2024 09:01

That's how I see it too net.

A deal of that size is often paid over time so I personally don't see it as a major issue.

Good luck all 👍🏻

[tornado12] 18/9/2024 08:54

Yes we need some optimism on this board 👍

[netcurtains] 18/9/2024 08:47

I guess, what is good about the deal is it gets rid of Cala homes, and every year for the next 5 years, no matter what else happens, LGEN will always get £115M cash to add onto the balance sheet....

[tornado12] 18/9/2024 08:36

I agree it’s not the best deal of course , but also believe this was never core business and right to sell. Our CEO has a lot to prove and hope he delivers clear results next March. Long time to wait .. unfortunately.. firm top draw hold IMO

[netcurtains] 18/9/2024 08:17

Yes its like LGEN have given the buyers an interest free loan of £600m spread over five years so the buyer can afford to buy CALA HOMES...

[1robbob] 18/9/2024 08:01

The sale proceeds for the sale of CALA is needlessly protracted..5 years!!

[tornado12] 18/9/2024 07:53

We expected the sale and I think this is a good move by LGEN. I expect this extra cash will support their core investments which provide more predictable profits. If the SHR is focussed on buybacks there’s not a lot in favour IMO .. but sustaining and growing the dividend with inflation is the main reason to be in. This step will support medium term this strategy GLA

[mcunliffe1] 18/9/2024 07:48

I suspect the market has dropped generally this morning on the news that Israel have sabotaged several thousand pagers used primarily by Hezbollah operatives. There are reports of serious facial injuries, hand and even groin injuries. Nine dead so far, 2,500+ seriously injured.

This could result in another all-out war between Israel and Hezbollah in Lebanon.

[netcurtains] 18/9/2024 07:39

I wonder if this is the sentence that "tanked" the stock:

"
with the remaining consideration being paid over the next five years on a deferred non-contingent basis.
"

FIVE YEARS is a heck of a long time before you get the money.

[netcurtains] 18/9/2024 07:30

Tnt99: You're not the only one....

It is weird...

There is slways something somewhere in the small print

That we miss and the early market people know....

What do they read that we do not?

[tnt99] 18/9/2024 07:28

I thought this was great news money sloshing around

[supermarky] 18/9/2024 07:15

it's always sell on the news

[p0pper] 18/9/2024 07:13

This new boss must pull a rabbit out of the hat soon, this is sad to see a giant of Britain languishing like this. Market seems totally unimpressed with what he's done so far.

[netcurtains] 18/9/2024 07:13

Gosh early morning market hates the news....

Its fallen more than the other big divi finance companies.

Or

is it sell on news?

Blimey..

Really counter intuitive.

[cwa1] 18/9/2024 07:10

The market seems, so far at least, underwhelmed by the news...

[jubberjim] 18/9/2024 06:58

will be leaving bids in all the usual suspects but I am not going to be chasing it.

Still want to wait until USA elections.

But a little light might stir this lumbering beast into action.

In the meantime dividend lands soon

Good luck

[cwa1] 18/9/2024 06:56

The cash won't all come up front, like football players it will be paid in easy installments ;-)

The consideration for the sale will result in cash proceeds of £1.16bn (after adjustment for net debt), of which c£500m will be paid at closing with the remaining consideration being paid over the next five years on a deferred non-contingent basis. As at HY24, Cala had a Net Asset Value of £1.15bn and generated operating profits of £42m.

[williamcooper104] 18/9/2024 06:52

There's losing £42m of operating profit and getting £1.2bn If they use the proceeds to buy back shares then they are buying the divi yield of 9% at a cost of 3.5% (being 42/1,200) So that would increase the divi cover/allow the divi to be increased They won't use all of the cash to buyback though

[williamcooper104] 18/9/2024 06:48

Nice They'd guided IIRC a sale price of c£1bnAt 28x PE, that's a big spread over the P/E bought back shares are bought back at

[netcurtains] 18/9/2024 06:29

Nice lot of cash

[grahamg8] 18/9/2024 06:26

Proceeds are roughly 10% of the mcap. If enough goes into a buy back then it might move the sp, although I'm not convinced. If the idea is to pump up the share price then a cut in dividends is hardly on the cards. Plenty of cash sloshing round should ensure the divi is safe for now.

[skinny] 18/9/2024 06:02

Legal & General Group Plc ("Legal & General" or "L&G" or the "Group") today announces that it has agreed the sale of the UK house builder CALA Group ("Cala") for an enterprise value of £1.35bn, to Ferguson Bidco Limited, an entity owned by funds managed by Sixth Street Partners and Patron Capital.

The consideration for the sale will result in cash proceeds of £1.16bn (after adjustment for net debt), of which c£500m will be paid at closing with the remaining consideration being paid over the next five years on a deferred non-contingent basis. As at HY24, Cala had a Net Asset Value of £1.15bn and generated operating profits of £42m.

The disposal reflects L&G's disciplined approach to capital allocation and follows the Group's decision to create a Corporate Investments Unit as outlined at the Capital Markets Event ("CME") in June 2024.

Disposal proceeds from the sale will primarily be used, as they become available, to reinvest in the Group in line with our strategy and the capital allocation framework set out at the CME. The Board will also consider the proceeds as part of the Group's announced intention to increase returns to shareholders through ongoing buybacks. As signalled, the sale of Cala reduces the Group's Solvency Capital Requirement (SCR) by c£100m after diversification.

The transaction is expected to complete in Q4 2024.

[skinny] 17/9/2024 10:53

That chart looks familiar!