Daily Mail and General Trust (LSE:DMGT) has finally settled a controversial dividend that paid its shareholders equity in a car dealership Cazoo, whose value has crashed this past year.
The unusual dividend arrangement, in which the trust paid its shareholders part of a special dividend in Cazoo Group Ltd (NYSE:CZOO) shares, was struck in connection with its privatisation by the Rothermere family last year.
In December last year, directors at the DMGT declared a special dividend which would comprise a cash dividend as is typical as well as a share component.
Daily Mail shareholders were paid a special dividend of 568p later that month and it was agreed that some of the dividend would be paid in Cazoo shares.
The so-called share element of the special dividend amounted to half a share in Cazoo (0.5749 Cazoo shares) for every Daily Mail share held by the cut-off date on 16 December 2021.
The company expected that shareholders would take up the offer of the special dividend and settle the share element in the first half of this year.
Daily Mail said earlier this month that it had instructed the settlement of the Cazoo shares. Long-time investor in the Daily Mail, Lord Rothermere, the grandson of the publisher’s founder, initially struggled to persuade independent shareholders to agree to its offer to buy out shareholders, which was originally pushed back against, but finally accepted by 57% of those who held shares in the company on 16 December.
The planned special dividend was agreed as part of the final offer to take the publisher private last year. The Rothermere family offered to buy shareholders out for 270p per share, including a special dividend amounting to 568p per share, plus 0.5749 Cazoo shares for each share owned in the publisher and a final 17.3p dividend.
By the time that Cazoo was rolled up in a deal with Ajax Resources PLC (LSE:AJAX), which listed its shares on the New York Stock Exchange last year, the trust held shares in the company equal to 17% of Cazoo’s common stock.
Cazoo’s market value has since plunged, falling 90% in the past year as it struggled to compete against rivals such as WeBuyAnyCar.com.
On Friday, its shares traded at a dollar each, down from US$6.28 on 16 December 2021, the day the special dividend was announced.
Daily Mail shareholders who were bought out by the Rothermere family and part-paid a dividend in Cazoo shares must be regretting the special arrangement after seeing the company's share price fall so dramatically.
In a statement this morning, the Daily Mail trust said the settlement of the special dividend “has now completed”. The company said: “Shareholders who held DMGT Shares in certificated form had the Cazoo Shares to which they were entitled under the special dividend registered in their name by Cazoo’s transfer agent.”
Recipients of the special share dividend are expected to receive documented proof of their ownership of Cazoo shares within 14 days of the settlement, it added.
Shareholders who held uncertified holdings in Daily Mail through CREST had their CREST accounts credited with depositary interests in Cazoo.