Melrose Industries Share Discussion Threads

[typo56] 21/4/2023 12:23

For CGT, you should use the closing prices on the first day of trading following demerger and apportion the acquisition cost of your original MRO shares accordingly.

In this case it's quite simple, as there are the same number of MRO shares as DWL shares so the numbers are:-

MRO 413.45
DWL 117.20

Therefore:

413.45/530.65 (77.91%) of your original acquisition cost should be apportioned to your MRO shares

117.20/530.65 (22.09%) of your original acquisition cost should be apportioned to your DWL shares

At least, that's my understanding. Much the same as steeplejack's result but by the HMRC method.


Example
You originally bought 3,000 shares MRO shares at 110p per share (net of dealer costs and stamp duty)

The original acquisition cost is therefore £3300.

You now have 1,000 MRO shares with an acquisition cost of 3300*413.45/530.65 = £2571.16 or 257.126p per share.

Plus 1,000 DWL shares with an acquisition cost of 3300*117.20/530.65 = £728.84 or 72.884p per share.

(if you've done the sums correctly you should find you have the same % profit at close last night on your MRO and DWL shares, 62.2% in this case)

[ryelodge] 21/4/2023 10:23

The Circular for the demerger does have a section on taxation implications.

[steeplejack] 21/4/2023 09:17

It gives guidance but its pretty general and doesn't specifically apply guidance to demerging.As it stands,Melrose on its investor site cites its market capitalisation as £5.6bn.The Dowlais site states its market cap at £1.6bn.Notionally,the combined group would be £7.2bn.That means that Dowlais would be 22% of the notional group after yesterdays price moves.

[gargoyle2] 21/4/2023 09:09

Does HMRC give any guidance in these situations? Having never sold any MRO shares, I've never had to face the issue of the various recapitalisations that have gone on over the years

[steeplejack] 21/4/2023 08:58

In my ISA account,Barclays are applying a notional base cost to Dowlais of zero.I reckon the Revenue will run with that rather than have a notional base cost apportionment.Its quite useful to do the numbers though since it establishes that the demerger isn't that big.Theres a lot of Melrose left!

[ryelodge] 21/4/2023 08:29

Thanks Steeplejack. I used yesterday’s relative Opening prices and came up with 71% MRO and 29% DWL So same ballpark.

[steeplejack] 21/4/2023 08:21

UK capital gains nightmare.I think the Revenue might allow simplification and grant that Dowlais has a cost of zero.A proportion of costs allocation between the Melrose /Dowlais is however possible.Taking the close of Melrose last night of 401p and adjusting for the 1 for 3 consolidation,the price of Melrose notionally fell from 163p closing price on Wednesday to around 134p on Thursday close.A fall of that magnitude would suggest that Melrose shares fell around 18% as a result of the demerger of Dowlais.You could apply a ratio of 0.82 to your Melrose cost base and 0.18 to Dowlais but this ignores the strengthening of the two stocks on the day.Luckily,only hold stock in an ISA.

[ryelodge] 20/4/2023 21:55

Has anyone calculated the Melrose / Dowlais apportionment ratio to apply to the Capital Gains Tax base cost of the old Melrose shares, please?

[gettingrichslow] 20/4/2023 21:40

Does anyone on here understand the strong buying today in the new shares as soon as the consolidation got implemented? Why didn’t those buyers just buy yesterday or last week at a lower price? This seems to happen a lot when there is some kind of restructuring or consolidation and I’ve never understood the logic of the buyers to wait to buy until after the event, when they seem happy to pay more than they otherwise would have?

[typo56] 20/4/2023 19:37

It's been confirmed by FTSE. Dowlais will be demoted to the FTSE 250 from Tuesday.

I suppose that means at the moment there are 101 constituents.

[steeplejack] 20/4/2023 13:36

The consolidation hasn’t changed the VALUE of your Melrose shareholding.The price would ordinarily rise threefold but your holding would be a third of the size.In this instance though,Melrose has demerged Dowlais concurrently and you will receive shares in Dowlais on the basis of 1 share for every share you hold in Melrose post the consolidation.The demerger today has been pretty well received and your holding in Melrose (which in future be represented by a listed holding in both Melrose and Dowlais )is worth more today than it was yesterday.Brokers will update your details in a day or two.They are unlikely to be correct until later today at the earliest.Hope this helps.

[vineweevil1] 20/4/2023 13:26

Thank you, I guess my share dealing platform will add them in at some point..

[vineweevil1] 20/4/2023 12:10

Can I jump on this and as (what will probably be a daft question?). I’m not a trader, just happen to have quite a chunk of Melrose shares. I can see they have consolidated shares but wondering why my Melrose holding is worth a chunk lower than it was yesterday, should we also have shares in dowlais?

[ursus] 20/4/2023 12:09

One new Melrose and one Dowlais for three old MRO. Not strictly a consolidation tho.

[ursus] 20/4/2023 11:59

Ms Jones - it is 2 for 3.

[davius] 20/4/2023 11:47

It looks like the figures I was discussing were the wrong way round, Melrose being the larger and Dowlais the smaller.

Dowlais has fallen rapidly after a very high open, perhaps some selling as it will be expected to drop out of the FTSE 100 shortly (next week).

MRO bid 393.8p
DWL bid 111.76p

Combined share price remains higher than before the demerger.

[steeplejack] 20/4/2023 09:45

Looks like the demerger has gone down pretty well.The 1 for 3 consolidation gives a price of around 490 based on Melrose last night closing level.Add Dowlais at 117p to the current Melrose price of 393 and you get 510p.Thus the stock is up around 4% ish.These simplistic sums could well be wrong.

[steeplejack] 20/4/2023 09:25

https://research.ftserussell.com/products/index-notices/home/getnotice/?id=2607630

[typo56] 20/4/2023 09:05

Ah yes, I can now see MRO was expected to be worth twice DWL. Ought to ignore bulletin board chatter.

Therefore it could be DWL leaving the FTSE 100, not MRO.

I find it odd the company went for a 1 for 3 consolidation. In order to maintain a similar share price a 2 for 3 would have been more appropriate. Perhaps they didn't want to see DWL trading sub 100p.

[t 34] 20/4/2023 08:57

Why the price is up 137% ????

[blackhorse23] 20/4/2023 08:44

Excellent blue today , just out today & bought 888 for good lol

[ursus] 20/4/2023 08:13

Odd indeed Miss Jones. You can't trade at the quoted price. Or any other price.

[typo56] 20/4/2023 08:02

Odd pricing. I thought DWL was going to be the larger company, not MRO

[davius] 19/4/2023 21:32

Well assuming the effective values of the two companies in the demerger details are accurate, on the 25th April Melrose will be demoted to the 250 and Dowlais will remain in the 100. This is I assumed, but a lot sooner, obviously treated as a special case due to the demerger rather than leaving it to the end of the quarter.

[typo56] 19/4/2023 16:45

Both Melrose and Dowlais will be in the FTSE 100 from tomorrow. I've not really understood why they'll be more Dowlais shares than Melrose shares in the index.