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This is how I see it and you can shoot me down in flames if(when) you don’t agree!
The consolidation is 15 for 19. So if price closed at 240 on Friday then it opens at 304 on Monday morning.All other things being equal.
Ie: 19 shares at £2.40 = £45.60 so
15 shares at £3.04 = £45.60
So in my dubious opinion the price should open at £3.04 first thing, thereafter Mr. Market will do as he sees fit.
The Tesco BOD have said that they intend to compensate shareholders with a SD and so I can’t see how the 51p dividend can/will be deducted from the share price.If it were to be deducted then, as a number of you have said, what would be the point?
I was recently involved with the Aston Martin consolidation which was 1 for 20. For every 20 shares you held you got 1 post consolidation. The share price pre consolidation was 70p and was multiplied by 20 to bring about a £14 share price post consolidation. I appreciate there was no SD involved with the Aston Martin consolidation but I can’t see how the Tesco consolidation is going to play out any differently.
Jonny, the Tesco board have gone on record to state that they want to keep the share price roughly the same before and after it pays the special dividend. So around 2.40, no gain there for me personally if that happens.
Nige, I've no idea what Mr Lewis would have done but this consolidation certainly isn't benefiting the ordinary Joes much in my opinion & it certainly, 100%, isn't a return of sale proceed money. Enough speculation on my part, I'm happy to wait & see what the next few weeks & months bring, just wanted to have my two penneth. GLA
jon
''so I can’t see how the 51p dividend can/will be deducted from the share price.If it were to be deducted then, as a number of you have said, what would be the point?'
£5 Billion of assets leaving the company will be reflected in the share price.
The consolidation is a cosmetic exercise to keep the price of each new share the same as each old share .
The point was to return assets to shareholders. The realisation of the Asian assets at a good price and then it being conveyed as to what was to be done with the proceeds, back in March, has had the effect that of the Tesco share price performing relatively well against the general market since the outbreak of the global pandemic, so shareholders were free at any time to take advantage of this relative strength and sell shares. Without the Asian transaction, the Tesco share price I imagine would have been languishing at a much lower level.
I purchased more Tesco shares on Friday at 239p, purely based on a pre consolidation outlay of 239 minus 51 (188p) per pre consolidated share.
I felt that this was a reasonable price, considering that near term profitability is likely to be as good as when we had the Asian assets, and hopefully the share price in the coming months will appreciate with the rest of the market as we get Covid 19 under control.
G59
''but this consolidation certainly isn't benefiting the ordinary Joes much ''
There is NO 'benefit' to shareholders. It is just cosmetic. Staff scheme option prices can stay they were though because of the consolidation.
as they were
''will be reflected in the share price.''
share price/market cap
Hi LongTermInvestor,
I take your point but can you answer this for me then?
My Trading Platform wrote to me this Friday evening 12th and advised me that over this weekend that they will consolidate my shares from 1000 to around 790 shares and they will adjust the share price from £2.40 close on Friday to £3.04 opening tomorrow morning?
My overall holding value will therefore remain unchanged but, and this is what we all should be most concerned about, the Tesco share price will be uprated to £3.04!
Obviously what the market does to the share price thereafter remains to be seen!
jonny,
Your price for Monday of £3-04 doesn't reflect the fact that the "old" shares should have gone "ex dividend" by then (and thence fallen to about £1-89 as a theoretical price). Whilst the special dividend event and the consolidation event are said to be happening at the same time, my belief was that the 50.93p per share dividend is being paid on the "old" shares, not the "new" shares. The old and the new shares are different "classes", if that's the right word, with different "par values" (one being 5p and one being 6.333333p). The £1-89, multiplied by (19/15), gets you back to about £2-40 per New share - everything else being equal. Of course, all this doesn't happen in a vacuum; as another commenter has said, the price we see on Monday is then also subject to the vagaries of "the market".
If I have got this wrong, I stand to be corrected (and probably out of pocket...) on Monday morning when we see the price of the "new" shares.
ATB,
Mike.
jon
Your trading platform has therefore not taken account of the return of capital.
Tesco will be going XsD tomorrow
I agree with you Johny the only thing that will affect this is pre trading. That’s why I think opening price of £2.80. And after that anything could happen could go £6 or £1.50 that’s just the market but to be exactly £2.40 that would have to be just the right amount of buys and sales! would be very strange for this to happen.
Hi all. This is jus my stupid view but before shares were consolidated they would have issued a full year div of say 10 p so shares at £2.40 that is a 4.16 % return but after the consolidation there will be less shares in issue so the full year div should rise to say 11.5 p so i can't see how the shares can open at around £1.90 as this would mean a return of around 6% so the she price has to be a lot higher. I would def be filing my boots at £1.90 or even a bit higher to add to my holding. Am I right with my calculations ? I welcome your views