VTG just a couple of weeks ago announced the sale of their ICT business to Telstra. This was the main part of the whole company and in the announcement have flagged the intentions that a large part of the proceeds will be paid out via fully franked dividends. In fact, with the shares trading at about 80 cents now, the company said if the deal gets approved then the fully franked dividend would likely be in the range of 39-45 cents a share. The current market cap here is currently about $130 million.

If the dividends get paid out the company will be left to focus on the remaining business called Artisan, specializing in the skin health and wellness category. Whist this side of the company is borderline profitable, the revenues are growing by more than 40% so it might have plenty of potential. Given that the announcement speaks of the company leaving aside around $35 million even after paying out these dividends, perhaps there is limited downside overall here for those that like their franking credits. The shares have fallen from 93 cents since this deal was announced as some investors were hoping for a better sale outcome to Telstra.

Perhaps some of the institutional shareholders might push back on management here, try and get more cash / franking returned to shareholders? Or could they even think about voting against this deal? Given that the share price reaction has been negative since this announcement, whilst I think it is unlikely, even if the deal got voted down it could even be good for the shares. Or as I suggested if they can tweak the path forward so that more money can be returned to shareholders in the shorter term via franked dividends, and less get kept with the remaining Artisan business perhaps that can be good for the share price. Shareholders probably deserve more of a say whether so much cash should be left in the remaining business?