You don't have credit card details available. You will be redirected to update payment method page. Click OK to continue.
In regards to the BHP buy back offer – you mention a special dividend payable in January 2019. Our assumption is this divided is to be paid to shareholdings left after the Buy Back offer has been completed. We are in Pension mode in our SMSF and if we participate in the buy back would top up our BHP to the level of the old holding.
How would the special dividend effect the purchase price of the BHP shares? Our expectation is it will increase and negate the advantages of participating in the buyback.
Is our assumption correct, and would we be better off to just retain our current holding and accept the special dividend?
A: While, your assumption is correct (that is, if you accept the buyback, you won’t receive the special dividend), you will still (from a tax perspective) be better off by accepting the buyback.
BHP has (across both the Australian and UK entities) about 5.3bn shares on issue. The buyback will reduce this by approximately 240m shares, leaving approximately 5.1bn shares post the buyback. The special dividend of around US$5.2bn will translate to around US$1.00 per share – approx. A$1.40 per share. This will be fully franked, with franking credits worth around 60c.
Under the buyback scenario for a SMSF in pension, assuming a discount of 14%, you will be around $7.61 per share better off by selling into the buyback than by selling on market.
