Bottom Line: ABF offers a genuine bonus

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The Independent Online
THERE are, alas, precious few companies that are prepared to offer shareholders pounds 45m for the onerous task of reading a fistful of documents (Enterprise's advisers should take note).

But the 10p-a-share dividend on offer as part of Associated British Foods' restructuring does seem to be a genuine bonus, rather than - as with so many other privately controlled companies - an attempt to pull the wool over the eyes of minority shareholders.

Despite the complicated machinations, ABF's external shareholders will be in exactly the same position as they are now. The 40 family members will have exchanged much of their unlisted interests for pounds 130m and a direct stake in a quoted company.

In a nod to the Cadbury committee, ABF is to appoint two independent non-executive directors, but Garry Weston, chairman, makes it clear that the business will continue as normal.

Shareholders should not expect a dramatic increase in the dividend level - despite the generous cover and the pounds 1.7bn of retained earnings. Mr Weston will still prefer to keep a large chunk of profits for re-investment in the business - although, with compound growth of about 11.5 per cent over the past 10 years, the pay-outs have not been that mean.

Nor should shareholders expect ABF to embark on a spending spree with its pounds 500m-plus cash pile. While it may be interested in parts of Allied Lyons' food business, it is not about to swallow it all in a pounds 1bn deal.

There are also three junior Westons being groomed to take over although not, if Mr Weston senior has his way, for at least four years.

The steady-as-she-goes message was a disappointment to those who have pushed ABF's shares up by 15 per cent against the market in the past two months in the expectation of more radical changes, and the shares closed 15p lower at 584p. But shareholders should know better than to expect excitement from bread-making.