Daily Telegraph: What BPB shareholders should do to earn respect: “You couldn't make it up. For months concerns have been raised here about British shareholders in Royal Dutch Petroleum being saddled with a multi-million pound tax bill because of Shell's corporate restructuring. Now another company is at it.”: Friday 2 December 2005
Big tax bill looms for BPB investors
You couldn't make it up. For months concerns have been raised here about British shareholders in Royal Dutch Petroleum being saddled with a multi-million pound tax bill because of Shell's corporate restructuring. Now another company is at it.
This time the culprit is Saint-Gobain's £3.9billion bid for British plasterboard maker BPB. Yesterday the Association of Private Client Investment Managers and Stockbrokers pointed out that the deal will leave 8,000 holders in BPB with a £25m capital gains tax bill because they will have to receive the cash in one go.
While a loan note would allow the 8,000 to spread the tax liability over several years, Saint-Gobain's response was a gallic shrug of the shoulders. After all, the fate of BPB's shareholders is not Saint-Gobain's concern. But just as with Shell, the blame lies with the City advisers which have creamed millions in fees. Saint-Gobain's advisers UBS and BNP Paribas must consider the interests of all investors, even the small private shareholders. By ignoring them, the bankers should be ashamed of themselves.
Typically a £40,000 holding will trigger a £10,000 tax bill. Many of these are long-term BPB holders who are being rewarded by receiving cash for their shares, a large chunk of which will head for the hungry coffers of the Chancellor of the Exchequer.
The deadline for BPB investors to accept the offer is today at 1pm, although this deadline will almost certainly be extended by 14 days to mop up tracker funds' holdings which can only declare when a bid goes unconditional.
BPB shareholders who are faced with a large tax bill could do no worse than follow the lead of the refusenik investors in Royal Dutch Petroleum who bravely refused to accept the terms of the deal (despite claims from Shell boss Jeroen van der Veer that there was nothing left in his tool box to help them) and were rewarded when Shell reneged and offered a loan note.
By refusing to accept, the worst that can happen is receiving cash in a "squeeze out". The best outcome would be that Saint-Gobain finds a loan note for them. Then perhaps Saint-Gobain might start to treat the private BPB shareholders with the respect they deserve.
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