Johannesburg - South African mobile operator Vodacom [JSE:VOD] on Wednesday announced two share repurchase offers. The offers are aimed at providing minority shareholders holding up to 500 Vodacom shares the ability to easily and cost-effectively realise value from their shares at a premium to the current share price and at the same time to rationalise the company's large share register.
Vodacom is launching an odd-lot offer to shareholders who hold less than 100 Vodacom shares, and a specific offer to shareholders who hold from 100 to 500 shares.
These offers, which in aggregate impact less than 1% of Vodacom's shares in issue, provide those affected shareholders who have small holdings the opportunity to sell their shares at a premium and to do so without having to incur the usual brokerage and transaction fees that can be substantial in relation to the size of their investment. Through this exercise, the company hopes to reduce the administrative costs associated with servicing the approximately 86 000 shareholders currently owning between 1 and 500 Vodacom shares.
Odd-lot holders - those holding less than 100 shares - are being asked to either elect to sell their holding as per the terms of the offer or retain their holding. Those odd-lot holders who do not make an election will, as per JSE rules governing odd-lot offers, automatically be regarded as having accepted the offer.
Specific holders - those holding 100-500 shares - can elect to sell all their shares at the offer price. As per JSE rules, the shareholding of specific holders who do not make an election to sell their shares will remain unchanged.
A general meeting of shareholders will be held on 4 March at Vodacom's Midrand head office to approve the necessary resolutions to implement the offers.
The offer price of R56.61 per share for both offers was calculated using the volume weighted average traded price on the JSE over the 10 trading days commencing 25 January 2010 and ending February 5 2010, plus a 5% premium. Odd-lot holders and specific holders will not have to bear any transaction costs of participating in the respective offers.
Vodacom Group chief financial officer Rob Shuter said: "We see this as a win-win scenario. Minority shareholders who find it difficult and expensive to sell their odd-lot holdings can now do so at a premium price with no brokerage fees. Vodacom meanwhile can reduce the substantial costs associated with servicing a large number of small shareholders."
With specific reference to the odd-lot offer, Shuter added: "We want to emphasise that as per the JSE Listings rules, those persons holding less than 100 shares must make an election to retain their shareholding if they do not wish to accept the offer."
- I-Net Bridge