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An almost 6% jump in the first 5 minutes of trading. Looks like the market loves the news.
So 8-14% discount to the market price of JBH for five days prior to the close of the offer. Tax wise that the buy back comprises a tax component of 58c a share and a fully franked dividend of 58c. Does that mean $1.16 all up? So supposing the average price per share is $20 less 14% = $17.20 + ($1.16 + 30% tax = $1.51) for a total nett worth to us of $18.71 p/share or a big loss to us - it seems.
I'm probably missing something here, but it looks a lousy offer to us, where are we going wrong?
For Australian tax purposes, the Buy-Back price is expected to comprise the following:
a) a capital component of $0.58 per share; and
b) a fully franked dividend equal to the Buy-Back price less $0.58.
For capital gains tax purposes, the sale consideration received by JB Hi-Fi's shareholders will be the Deemed
Market Value2 less the dividend component.
That is not correct. Read it again
Haha, you're correct, so would that make the offer worse by 58c?
I suppose I should also have stated in my original post, that I'm not actually seeking personal financial advice per se, but whether the offer in cases like ours make it worth pursuing.
Thankyou VSntchr and particularly skc. I was correct in one way by well n truly barking up the wrong tree.
My first posts on this forum today, I think i'm going to like it here and hopefully will get to contribute something of value to others.
Cheers - Phil
stop press: Spongle that'll be great.
Say the market price is $20, and buy back price is 14% lower = $17.2.
If you participate in the buy back you get:
a). $0.58 in capital.
b). $16.62 in fully franked dividend (being the buyback price - $0.58)
c). a capital loss (being your purchase price minus the capital component and some tax component of the buyback based on ATO ruling)
d). a franking credit of $7.12 from the fully franked dividend
The franking credit of $7.12, is this correct? Isn't the company corporate tax rate a flat 30%.
When we've previously declared fully franked divis to the ATO we've only been refunded 30%, that's with us being under the threshold for tax.
Cheers again - Phil
Assume $16.62 fully franked dividend
Gross up dividend = $16.62 / 0.7 = $23.74
Franking credit = $23.74 * 0.3 = $7.12
Yes I was working on $16.62 being the gross figureBut the new gross makes this even more attractive to us. Today's SP up another 30-40c atm. Very happy here.
Just one little question, Is it your dog at the PC computing the figures for you, when are the pups available?)
I expect a large fall on Friday (if not tomorrow) to bring it back down (if not below) where it all started.
Sorry to hear about the demise of your dog.
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