Sale of Vita Group’s Retail ICT and Sprout business to Telstra
24 September 2021
Vita Group (ASX: VTG) today entered into a Share Sale Agreement (SSA) for the sale of its Retail Information and Communication Technology (ICT) business to Telstra (ASX: TLS) for cash consideration of $110 million, subject to a net working capital and net-debt adjustment mechanism (referred to as the Vita Retail ICT Sale or Proposed Transaction).
Highlights
• The Proposed Transaction provides shareholder value via an expected fully franked Special Dividend of approximately $65 to $75 million, representing $0.39 to $0.45 per share, to be paid in two payments, with attached franking credits of up to approximately $0.17 to $0.19 per share (based on current estimates).
• Vita intends to retain approximately $35 million to fund growth of the Artisan Aesthetic Clinics business.
• The Vita Board considers the Proposed Transaction to be in the best interests of Vita Shareholders, given Telstra’s intentions to transition the Telstra branded retail store network into Telstra ownership.
• The Proposed Transaction is conditional on, amongst other things, 50 per cent shareholder approval, with an Extraordinary General Meeting currently expected to be held on or about 5 November 2021.
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Propitious timing from @PortfolioPlus who posted on this two days ago and predicted the likelihood of this going ahead before Xmas. Although the consideration for the divestment is considerably less than they hoped for (without doing any analysis myself their justification for the amount looked reasonable...even conservative) and I wonder whether they think shareholders have been somewhat dudded? In any case it is likely the SP gets a nudge up today and shareholders will need to make a decision about whether they take advantage of this and forego the partially franked dividend or place faith in management to execute against the remaining business. I can't believe I'm saying this but Telstra actually looks like it is having a bit of a purple patch at the moment.
[Not held]
