Marks & Spencer

melbury

PLEASE! PLEASE! PLEASE!
I tried asking Adam Shaw ages ago but never got a reply, so really would appreciate one here. As I am sure many of you know, M & S were making a grand gesture a few years ago and supposedly "giving back" to their shareholders. End result was my shareholding was cut from 1000 to 809 shares resulting in obviously lower dividends, so where did I gain. I know I got some B shares, but I would rather still have my original 1000 M & S ordinary shares.

Please can somebody tell me "What did I gain?" I feel that I was stitched up.

Thanks
Mel

MJSW

You didn't really gain anything. But you lost nothing either. Essentially all that happened was that instead of owning x% of a company running some shops and having some suplus cash, you ended up owning x% of a company running some shops and x% of the B shares which could be converted into the cash. Your total ownership of the company's assets was unaltered, it just ended up in a slighlty different form.

Obviously the dividend on 809 shares is lower than on 1000 shares, but you also need to take into account the income from the B shares. If you had kept the B shares, then the dividends on those would mean that your total income would currently be slightly higher than it would have been previously. If you had sold the B shares and put the money in a decent savings account, then your total income would also be higher than it would have been previously.

Why would you rather still have your 1000 M&S shares? M&S are currently 348.5p, so your holding would now be worth £3485. Instead, you now have 809 shares worth £2819, and cash or B shares worth £700, making a total of £3519. If you really still want 1000 shares, then use the £700 from the B shares to buy another 191 shares. Even after dealing costs and Stamp Duty, you will end up with 1000 M&S shares and have a small amount of cash left over.