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LONGUEUIL, Quebec — The Jean Coutu Group has announced a share repurchase plan and a special onetime dividend to return as much as $502 million (Canadian) in cash to shareholders.
The share repurchase offer covers 22 million Class A subordinate voting shares without par value, at a price of $18.50 per share. The onetime dividend is 50 cents per share on Class B shares (multiple voting) without par value of Jean Coutu Group.
“Following the sale of our equity stake in Rite Aid Corp. and given our significant cash flow from operations, we believe that the offer and the special dividend will provide an efficient means to distribute a significant amount of cash on hand to shareholders,” says president and chief executive officer François Coutu.
According to the company, the share repurchase offer is an attractive investment as well as an efficient way to distribute up to $407 million in cash to shareholders who choose to participate, while also increasing the equity interest of shareholders who do not sell their shares. Management expects to have sufficient financial resources and working capital to carry on its operations after executing the repurchase and distributing the dividend.
“We continually invest in our network to provide an enjoyable shopping experience for customers and invest in growth opportunities to supplement our network and support our franchisees,” Coutu continues. “Jean Coutu Group does not have any outstanding debt, and we believe that this distribution of capital demonstrates our commitment to our shareholders without constraining our growth plan for the corporation.”
The share repurchase offer, which was issued on October 10, expires at 5 p.m. Montreal time on Thursday, November 14, unless it is extended or withdrawn by the company. The offer is not conditional on a minimum number of shares being repurchased, but it is subject to other conditions customary for such a transaction.
The special dividend, meanwhile, will be paid on December 2 to all shareholders of record on November 25. The aggregate amount of the dividend will depend on the number of shares repurchased.
If the repurchase offer is fully subscribed, then the aggregate amount of the special dividend will be approximately $95 million. The Fondation Marcelle et Jean Coutu, established by founder Jean Coutu to pursue philanthropic goals, intends to sell back 21 million shares in order to fund various philanthropic objectives.
