Buy-back bonanza for three firms' investors

IT WAS a bumper day for shareholders yesterday as three companies announced substantial share buy-backs. WH Smith led the way with plans for a pounds 250m capital return following the completion of the pounds 300m sale of Waterstone's to HMV Media. Burmah Castrol, the lubricants group, also showered its shareholders with pounds 250m. Separately Ascot, the engineering mini conglomerate, announced a pounds 50m share buy-back.

Shareholders in WH Smith will receive 53.75p per share, representing a return of 10 per cent of the company's market value, or pounds 150m. The buy- back will be effected via the issue and buy-back of B shares. At the same time where will be a consolidation of the company's share capital on the basis of nine new ordinary shares for every 10 currently held. The remainder of the capital return will be conducted though market purchase of around pounds 100m.

The size of Smith's cash return was in line with analysts' expectations and the City drew additional comfort from the company's comments that it would consider further buy-backs. These will depend on the outcome of negotiations with Virgin over the sale of Smith's 75 per cent stake in the Virgin-Our Price music group.

"We will sell to Virgin if they are prepared to pay us a sensible price for the business," said Richard Handover, Smith's chief executive. "But we're in no great rush to do it." Smith's has an option to buy the remainder of the business next year.

He said there were no plans for further corporate activity. "We're just in the process of buying John Menzies and we have a lot of work to do on the existing business." Smiths shares edged up 5p to 542.5p.

Burmah Castrol plans to return not less than pounds 250m of capital to shareholders although these plans are not expected to be executed until after April 1999. The company intends to seek shareholder approval at this year's annual general meeting to buy back up to 10 per cent of its share capital. Management will renew this power annually.

But the company is likely to wait until ACT is abolished in the spring of next year before moving ahead as this would be more tax efficient and "serve shareholders' best interests".

Tim Stevenson, the new chief executive, said the eventual figure could be higher than pounds 250m. It is part of a strategy of balance sheet management under which the company will also redeem its small number of preference shares.

Burmah shares soared 69p to 1170p on the buyback plans plus better than expected pre-tax profits which were 7 per cent ahead at pounds 279m.

Shares in Ascot Holdings, the engineering group run by Hamley's chairman Howard Dyer, climbed on news that the company is returning pounds 50m to shareholders, worth around 61p per share. Ascot is seeking shareholder approval for the re-purchase of up to 10 per cent of its stock.

Mr Dyer said that trading results in the first two months of the year were ahead of 1997's and that substantial funds were being committed to organic growth. The shares rose 31.5p to 296.5p. Profits last year rose from pounds 6m to pounds 30m.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Telesales Executive - OTE £25,000

£13000 - £25000 per annum: Recruitment Genius: Would you like to be part of a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Are you passionate about sale...

Ashdown Group: Graduate Developer (Trainee) - City, London

£25000 per annum + benefits: Ashdown Group: A large financial services company...

Ashdown Group: Marketing Assistant - Financial Services Sector - London

£20400 per annum: Ashdown Group: An established and highly reputable organisat...

Day In a Page

The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory
Ashes 2015: Alastair Cook not the only one to be caught in The Oval mindwarp

Cook not the only one to be caught in The Oval mindwarp

Aussie skipper Michael Clarke was lured into believing that what we witnessed at Edgbaston and Trent Bridge would continue in London, says Kevin Garside
Can Rafael Benitez get the best out of Gareth Bale at Real Madrid?

Can Benitez get the best out of Bale?

Back at the club he watched as a boy, the pressure is on Benitez to find a winning blend from Real's multiple talents. As La Liga begins, Pete Jenson asks if it will be enough to stop Barcelona
Athletics World Championships 2015: Beijing witnesses new stage in the Jessica Ennis-Hill and Katarina Johnson-Thompson heptathlon rivalry

Beijing witnesses new stage in the Jess and Kat rivalry

The last time the two British heptathletes competed, Ennis-Hill was on the way to Olympic gold and Johnson-Thompson was just a promising teenager. But a lot has happened in the following three years
Jeremy Corbyn: Joining a shrewd operator desperate for power as he visits the North East

Jeremy Corbyn interview: A shrewd operator desperate for power

His radical anti-austerity agenda has caught the imagination of the left and politically disaffected and set a staid Labour leadership election alight
Isis executes Palmyra antiquities chief: Defender of ancient city's past was killed for protecting its future

Isis executes Palmyra antiquities chief

Robert Fisk on the defender of the ancient city's past who was killed for protecting its future