Special Dividend Raises Stakes as Reject Shop Shareholders Vote on Dollarama Takeover
The Reject Shop has announced a fully franked special dividend of $0.77 per share as part of its acquisition by Dollarama, boosting the total transaction consideration to $6.68 per share.
- Special dividend of $0.77 per share declared, fully franked
- Total transaction consideration rises to $6.68 per share including dividend
- Scheme record date set for July 15, 2025, with payment on July 22
- Board and major shareholder Kin Group recommend voting in favor of the scheme
- ATO draft class ruling on dividend tax treatment pending finalisation
Special Dividend Announcement
The Reject Shop Limited (ASX – TRS) has confirmed its intention to pay a fully franked special dividend of $0.77 per share, contingent on the successful implementation of its acquisition by Canadian retailer Dollarama Inc. This dividend will be paid to shareholders on July 14, 2025, with the record date set for July 7, 2025. The franking credits attached to this dividend are expected to provide additional tax benefits to eligible shareholders.
Impact on Transaction Consideration
This special dividend effectively increases the total transaction consideration for Reject Shop shareholders to $6.68 per share. This total includes the $5.91 cash per share offered under the scheme of arrangement and the $0.77 special dividend. The scheme record date for the acquisition is July 15, 2025, with the scheme consideration expected to be paid on July 22, 2025. The Reject Shop Board has emphasized that these dates are subject to change and will communicate any updates accordingly.
Board and Major Shareholder Support
The Reject Shop Board unanimously recommends that shareholders vote in favor of the scheme, provided no superior proposal emerges and the Independent Expert maintains a positive assessment of the deal’s benefits. Notably, Kin Group Pty Ltd, the largest shareholder controlling approximately 20.7% of shares, has also declared its intention to support the scheme under the same conditions. This alignment between management and major shareholders adds significant weight to the proposed transaction.
Tax Considerations and Regulatory Status
The company has received a draft class ruling from the Australian Taxation Office regarding the tax treatment of the special dividend. While this draft ruling is not binding, it provides preliminary guidance on the franking credits and tax implications for shareholders. The final class ruling will only be issued after the scheme’s implementation and will be publicly available on the ATO’s website. Investors should monitor this development closely as it may influence the net benefit of the dividend.
Looking Ahead
As the acquisition process advances, shareholders face key decisions at the upcoming scheme meeting. The Reject Shop’s clear communication and the backing of major stakeholders suggest a smooth path forward, but the final outcome will hinge on shareholder votes and any potential competing offers. The timing of payments and regulatory approvals remain critical milestones to watch in the coming weeks.
Bottom Line?
With the special dividend sweetening the deal, all eyes now turn to shareholder approval and the final tax ruling.
Questions in the middle?
- Will the final ATO class ruling confirm the expected tax benefits of the special dividend?
- Could a superior proposal emerge to challenge the current scheme of arrangement?
- How will the timing of payments and regulatory approvals affect shareholder returns?
