Recruitment service provider CPL Resources will return €25 million to shareholders after a proposal for a tender offer was accepted.
At an extraordinary general meeting (egm) held on the same day as the company’s annual general meeting (agm), shareholders approved a tender offer to return funds at a price of €6.75 per share to qualifying shareholders.
A tender offer is a vehicle whereby an investor, or in this case the company, buys shares from shareholders for a certain price at a certain time.
Monday's vote means company chief executive Anne Heraty and her husband Paul Carroll stand to gain just shy of €9 million after they cash in over 1.3 million shares between them.
Their collective shareholding will remain unchanged and they’ll continue to hold 35.72 per cent of the company.
Strategic options
In June, CPL reported that it had built up a cash position of €33.6 million and subsequently considered a “range of strategic and financial options to enhance shareholder value”. Following the review, the board elected to return capital to shareholders, suggesting that was the most “effective use” of shareholder funds.
In a client note, Goodbody Stockbrokers said that the offer signifies “confidence” in the group’s forecast cashflow generation, but also an “indirect acknowledgement” that dealflow over the near term is likely to be limited.
"As such, post the offer, we see the share price reverting to the fundamentals of the primary markets of interest: Ireland and the UK," the note added.
Asked whether this cash return to shareholders was a tacit admission of little left in the way of acquisition targets, chairman John Hennessy told The Irish Times the company was strategic in the way it acquires other companies and doesn't necessarily target companies requiring "big cash spends".
Well hedged
On Brexit, Ms Heraty said that while it threw up concerns, it also presented opportunities and noted that while some clients were uncertain, CPL was well hedged, having recently opened offices in both Boston and Munich.
Under the tender offer, the company will purchase up to 3.7 million ordinary shares from qualifying shareholders at the tender price. Those shares will subsequently be cancelled by the company.
Shareholders who decided not to participate in the tender offer now own a greater percentage of the issued ordinary shares than they did before.
In addition to voting in favour of the tender offer, shareholders voted in favour of all resolutions at the agm including the declaration of a dividend of 5.75 cent per ordinary share. Anne Heraty, Oliver Tattan and Colm Long were also re-elected at the meeting.
