Shriro’s $5M Buy-Back: 7.9% of Shares at $0.81 Each

Strategic Capital Return

Shriro Holdings Limited (ASX, SHM), a consumer products marketing and distribution group operating across Australia, New Zealand, the USA, and China, has announced an off-market equal access share buy-back targeting up to $5 million. The buy-back price is set at $0.81 per share, a notable 14.78% premium to the recent five-day volume weighted average price, and represents approximately 7.9% of the company's issued share capital.

This initiative follows a $15 million buy-back completed earlier in 2025 and is designed to return excess capital generated primarily from a strategic pivot to a capital light model for its seasonal products business, particularly BBQs. The Board views the buy-back as the most efficient way to return cash to shareholders while simultaneously enhancing key financial metrics such as earnings per share (EPS), return on equity, and cash flow per share for continuing shareholders.

Shareholder Approval and Participation

The buy-back was approved by shareholders at the annual general meeting held on 17 November 2025. Participation is voluntary, with shareholders invited to tender up to 7.9% of their shareholding. The tender period opens on 28 November and closes on 19 December 2025, with payments expected by early January 2026. Importantly, shareholders with smaller holdings (2,469 shares or fewer) must tender their entire holding if they choose to participate.

The buy-back is structured as an equal access scheme, ensuring all eligible shareholders have the same opportunity to participate. If offers exceed the $5 million cap, a pro-rata scale back mechanism will be applied to additional shares tendered beyond individual entitlements.

Impact on Share Capital and Control

Upon completion, the company expects to cancel the bought-back shares, reducing the total shares on issue from approximately 77.9 million to around 71.7 million. This reduction is anticipated to improve EPS and other financial ratios.

Notably, the buy-back follows a significant change in major shareholders. D2A Holdings and SPL Pacific sold their entire stake to Brunneis Investments Pty Ltd and associated trusts, which now hold 19.62% of Shriro. Post buy-back, Brunneis’ voting power could increase to 21.31%, potentially influencing corporate control dynamics. However, Brunneis has not indicated any immediate plans to increase its stake further or pursue control via takeover bids.

Strategic Implications

The buy-back signals a shift away from Shriro’s previously stated strategy of using surplus cash and debt to fund acquisitions aimed at EBITDA growth and portfolio diversification. Instead, the company will focus on organic growth avenues, including expanding its BBQ business internationally and securing new product agencies. The Board acknowledges that the buy-back will constrain the company’s ability to pursue mergers and acquisitions in the short to medium term due to reduced capital availability.

CEO Tim Hargreaves has confirmed he will not participate in the buy-back, and none of the other directors hold shares directly or indirectly, underscoring the voluntary nature of the offer.

Tax and Regulatory Considerations

Recent legislative changes mean that the buy-back price will not be treated as a dividend for tax purposes, with shareholders assessed on capital gains or losses instead. The company expects minimal impact on its franking account due to the buy-back price exceeding share capital per share by less than half a cent.

Shriro has secured necessary regulatory exemptions and waivers to facilitate the buy-back efficiently, including relief from certain ASX listing rules and ASIC provisions.