Wednesday, 22 May 2024

Large Greencore shareholder voices concerns over sale of US business

One of Greencore’s biggest shareholders has come out against part of the company’s plan to sell its US business.

Polaris Capital, which owns more than 9pc of the company, is against a plan to return the proceeds of the sale to shareholders as a special dividend, saying this will cause tax issues for shareholders.

It said money should be returned in a share buyback instead.

“The payment of a special dividend will cause a material taxable event for shareholders.  This taxable event, beyond a normal course dividend, will apply to most shareholders,” Polaris said.

“US shareholders who experience withholding tax, whether taxable or tax-exempt entities, will in most cases not be entitled or able to recover the withholding taxes nor avoid taxes on the distribution.  In the case of individual shareholders, many will experience taxation at high marginal tax rates in other jurisdictions.”

Polaris said it was “indifferent” to the US proposal but would vote in favour of it, while rejecting other resolutions relating to the form of the transaction and the special dividend.

“Some investors agitate for changes in corporate structure in the form of acquisitions, break ups, spin-offs, take private, and variations of financial engineering.  Often our analysis of such changes does not support the conclusion that such structural changes are in the best financial interests of shareholders in the short or long term,” Polaris said.

“We have decided to publicly announce our views in this instance to assist the advisors and other shareholders in their advice, analysis, and voting decisions.  We also emphasize our strong relationship with Greencore management and the mutual respect we have for each other.”

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