Originally Posted by
dubya
I bought some shares in Smiths City a couple of years ago when I read two companies connected with Sir Ron Brierley in Australia (Mercantile Investments and Sandon Capital) were accumulating them. They publicly advised at the time that the two companies would work together with their respective holdings, and they have now each accumulated 19.8% of the stock, so companies connected to Ron Brierley now control 40% of the company. As I understand it, they can not buy any more without launching a takeover bid.
Since they started buying, the share price has gone from 50c to the mid 70’s, and now after the buying from Australia has dried up, the price has inched back to mid to low 60’s. All on low volume.
The dividend at the current price is about 7.80% gross. Audited NAB of about 90c.
The company recently announced a 3:20 share buyback @ 72c. An extra-ordinary shareholders meeting is scheduled for November where share holder approval will be sought for this. The buyback is from insurance proceeds and a property sale, so as advised by the company will be a capital distribution. After the buy back (which is 15% of the total shares) the shares will be cancelled.
The company has just had it’s 99th year celebration, which they have reported was their most successful sales promotion yet. The finance company side of their business (78,000 active accounts on their books) continues to tick along, so I guess there is a good synergy whereby they sell the item and finance it themselves, so thereby getting two ‘bites of the cherry’.
They have recently expanded into Auckland and Northland.
I’m not aware of any NZ institutions or Kiwisaver providers with any relevant holdings.
Are there any other shareholders on this forum, or anyone actually, with a view as to what they think might happen going forward. The Ron Brierley of old is a well known corporate raider, and doesn’t buy stakes in companies for altruistic reasons.
There has to be an exit strategy for Brierley and the two companies. I have nothing to back this up, and it’s a bit of crystal ball gazing and fortune telling, but with the share price having been driven up when they were buying, and now drifting back down quite a lot after they stopped - maybe they wait for it to get as low as possible, then launch a takeover? At say a 10% premium to the then current share price. Everyone will think that’s really good considering where the price was before the takeover offer.
What they do after that is anyone’s guess, but they will certainly be trying to extract the 20-40c difference between share price and NAB.
Ideas anyone??