Info/help needed on Boots special dividend

headmystery

Last month i recieved a 'special dividend' from my Boots shares. Problem is I don't fully understand whats going on!

Web sites and papers hailed it as a great windfall for shareholders, with overall value being maintained, but it doesn't matter which way I look at it I seem to have lost £600-£800 overall depending on what share price I use.

Before the special dividend I had 2399 shares worth approx £17,200 (depending on the fluctuations in the market)

Boots took my holding of 2399 shares and reduced this to 1612 (with the new certficate now telling me these are 37.5p shares, not 25p shares like before the special dividend. They also gave me my windfall of approx £4,800.

The 'new' shares (1612 of them) are now worth approx £11,700. Adding on the £4,800 you get a value of £16,500 - £700 less than before my special dividend. That doesn't look anything like overall value being maintained to me!

I tried recalculating based on older, lower share prices, but no recent share prices seem to make the sums add up so that my holding has the same value now as before the dividend.

Added to this there was no prior communication from Boots telling me this was going to happen or explaining it for the un-initiated like me! A similar thing happened to me in the past when M&S changed the value of their shares, but they wrote and told me what was going to happen so i was fully informed.

I'm not looking for financial advice telling me if I should keep or get rid of what shares i have left. I would be over the moon though if anyone can shed some light for me so i don't feel like such a dim-wit! Is there something I don't understand (like the true meaning of 'overall value being maintained') or is this sort of loss just something i have to put up with (and one of the risks of share holding).

Thanks. :doh:

SickStu

Yes I don't get it either. In my experience when companies talk about 'returning capital to shareholders' it's always bad news - unless they just buy back shares on the open market and cancel them.
In an ideal world the reduced 'value' of the company (from paying out all that cash) should be offset by the fewer number of new shares but it never seems to work out that way. ????