Melrose Industries, an engineering company that seeks to acquire businesses it understands, improve them by a mixture of investment and changed management focus, realise the value created and then return it to shareholders. I have a holding in my income portfolio (epic code: MRO).
Todays announcement confirms the Company's intention on the return of capital, it intends to use part of the net proceeds of recent disposals (see here) to return approximately £600m in cash to Shareholders. This is equivalent to 47 pence per Existing Ordinary Share. The balance of the net proceeds has been used to pay down existing borrowings of the Company. Associated with this Return of Capital, there will be a one-off ordinary Share Capital Consolidation in the ratio of 11 for 13.
Melrose will allow the option of the return of 47p as capital or income to be paid on 27 February, or deferred capital taking it into the next tax year payable on 7 May, to suit individual investor's tax requirements. If the shares are held in an ISA or SIPP it is irrelevant whether the cash is taken as income or capital.
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