WPP Scangroup (NSE:SCAN) shareholders will receive 40 percent of the proceeds realized from the sale of its subsidiaries as a special dividend before the end of the year if they approve.
88.02 percent of the shareholders participated in the marketing services firm’s Extra-ordinary Annual General Meeting conducted electronically to vote on KSh5 billion sale Wednesday.
The votes will be announced Friday ( May 29, 2020) as tabulated by PriceWaterhouseCoopers (Pwc).
According to WPP Scangroup, their intention is to pay the KSh4.7 per share (KSh2 billion) special dividend “This is assuming we deliver to all the conditions precedent and achieving completion of the transaction before the end of June 2020,” the firm said in a response published on its website.
The key resolution during the AGM was the sale of 100 percent of its shareholding in Millward Brown’s Nigeria, West Africa, and East African business and its 80 percent shareholding in Research and Marketing Group Investment Limited.
“When the Company acquired the Kantar business in July 2018, the Shares Purchase Agreement (SPA) had “Tag and Drag” provisions, which provided that in the event that WPP Plc decides to sell its interests in the Kantar business, then WPP Scangroup would also be required to sell our interest in the business on similar or better terms than the terms offered for the global business. It is for this reason that when WPP Plc decided to sell its majority interest in the Kantar business, we were obligated to participate in the sale by offering our interest in the business as well,” WPP Scangroup said.
“To carry this resolution, the Company requires a simple majority that is 50 percent plus one of the votes of the shareholders attending in person or by proxy,” said the company.
The sale is projected to realize KSh 5 billion after estimated tax and costs. Funds raised from the sale will be used in expansion and capital needs with 40 percent of the proceeds being paid out as a special dividend to shareholders.
“The funds received from the disposal will result in a cash surplus in the company…as the independent Kantar Transaction Committee negotiated not to give any operational warranties in respect of the disposal such cash remains unencumbered,” Scangroup said in a circular to shareholders.
“The board will review the optimal use of proceeds taking into consideration potential expansion, capital needs and cash flows, but expects that at least 40 percent of the net proceeds to be returned to shareholders in the form of a special dividend.”