Building materials retailer Cashbuild wants to cut down on administrative costs by proposing an odd-lot offer to its shareholders.
This is when a company offers to buy back its own shares from shareholders owning fewer than 100 shares and is sometimes done to simplify the ownership structure.
At the end of January there were 2,477 odd-lot holders, making up 57.59% of the total number of shareholders in the company, which is valued at R4.73bn on the JSE, but their ownership only amounts to 0.16% of all issued Cashbuild shares.
“Therefore, more than half of the administrative time and costs associated with the Cashbuild shareholder base is incurred with respect to Cashbuild shareholders that hold less than 1% of the total shares in issue,” the retailer said.
This type of offer also gives odd-lot shareholders the opportunity to sell their stake without suffering dealing charges which might otherwise make it impractical for them to do so.
Cashbuild’s proposed odd-lot offer is to buy back the shares at a 5% premium to the 30-day volume weighted average price at the close of business on March 17.
The retailer reported last month that its same store-sales revenue dropped 5% in its second quarter to end-December, with the home improvement boom that started during the pandemic now over.
Its first half results from July to December showed a 4% decrease in revenue compared with the prior half year.
While consumers splashed out on renovations and redesign during the pandemic as they spent more time at home, many have returned to the office.
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