The Deliveroo PLC (LON: ROO) share price gapped 9.66% after unveiling a plan to return up to £250 million to its shareholders via a tender offer. The company plans to purchase up to 217,391,304 A Ordinary Shares from qualifying shareholders to reach its target.
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The online food delivery company revealed that it plans to purchase the tender offer shares within a price range of 115p per share and 135p per share. The purchase price represents a premium of between 6% and 24% to the closing price of A Ordinary Shares on 26 September 2023 (the last practicable date before the release of this announcement).
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The tender offer is set to open on 29 September 2023 and is expected to close on 27 October 2023 at 1:00 p.m. The tender offer proceeds will be despatched to shareholders in early November. The £250 million tender offer is the second announcement of a return of value to shareholders after the “£50 Million Buyback Programme” unveiled in March 2023.
The company bought back 40,668,480 A Ordinary Shares for a total gross purchase price of £44.2 million under the £50 Million Buyback Programme. The online food delivery company has effectively cancelled the £50 Million Buyback Programme today upon commencing the £250 million tender offer.
Deliveroo has announced a total value return to shareholders of £300 million, demonstrating its robust cash position and balance sheet from the beginning of the year. The tender offer triggered a rally higher in Deliveroo shares due to the premium offered to interested shareholders.
Interestingly, the company’s founder, Will Shu, declined to participate in the tender offer, as did all the company’s directors, instead choosing to hold on to their shares because they anticipate higher prices in future.
The lack of interest from company executives shows their confidence in the company’s future, which is why they are holding on for more significant gains in future. The company will hold a general shareholders meeting on 16 October 2023 to seek their approval of the tender offer and a follow-up offering if the £250 million is not exhausted.
Deliveroo share price.
The Deliveroo share price gapped 9.66% to trade at 121.5p, from Wednesday’s closing price of 110.8p.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.