Shareholders in Vita Group are set to receive a special dividend of up to 45c a share thanks to the decision to sell its retail telco business to Telstra for $110 million.
Vita has been a long-time operator of a collection of Telstra-branded stores, but earlier this year Telstra confirmed it intended to bring its retail network back to a company-owned model.
Telstra’s announcement (so much for the mythical benefits of outsourcing activities like retailing their products and services by so many companies) saw Vita Group shares slump 30% in a day in February.
Vita shares were trading at $1.13 before the February announcement and 92 cents yesterday – the 21-cent difference is around half the possible return, so there looks like a net benefit for shareholders from the sale proposal.
That meant Vita had to negotiate with the telco giant to end its dealership agreement and sell the stores back.
Vita confirmed on Friday that it had done a deal with Telstra and will be paid $110 million in cash. Shareholders will get between $65 and $75 million of the Telstra cash.
Telstra will take on the employment responsibilities for staff and managers who work in those stores as well as staff in their Sprout tech accessories business (around 1,170 people).
Vita has been preparing for this moment and from 2017 started giving the business a facelift through the purchase of skincare and beauty treatments businesses.
The company will invest the remaining $35 million in its Artisan Aesthetics Clinics business.
Vita shares closed at 92 cents on Thursday so the capital return will be very tasty.
Vita shareholders will be asked to approve the deal at an EGM on November 5.
Vita ordered up an independent experts report on the proposed sale (it didn’t have do) and it has given it the greenlight. Shareholders will get that report in the notice of meeting.