4th Feb 2020 08:57
(Alliance News) - Ferguson PLC said Tuesday it is considering two options for listing in the US following the planned demerger of its US and UK businesses, as Ferguson looks towards New York as the US business's "natural long-term listing location".
The FTSE 100 plumbing and heating company also announced that it has started a USD500 million share buyback over the next 12 months.
Ferguson said that its strong cash generation, as well as giving opportunities to invest in organic growth and acquisitions, means the group has surplus cash resources available.
Ferguson said its capital allocation priorities remain unchanged, with its investment priorities continuing to be achieving organic growth which exceeds underlying market growth, funding the ordinary dividend through this cycle.
Last year, Ferguson - which makes a bulk of its revenue in the US - announced plans to demerge its UK business Wolseley from its Ferguson operations in the US, with Wolseley remaining London-listed. The company had changed its group name to Ferguson back in 2017 to reflect the dominance of its US arm.
Ferguson said it is considering two options for its listing structure going forward.
The first option is to seek shareholder approval for an additional listing of ordinary shares in the US. Ferguson would seek an additional listing of its shares on a major US stock exchange whilst maintaining its existing premium listing on the London Stock Exchange.
An additional listing would require shareholder consent of 75% votes minimum, and even if granted, Ferguson would need a separate shareholder vote to cancel its London premium listing.
The second option is to seek shareholder approval for a primary listing in the US. Ferguson would seek a change of primary listing of Ferguson's ordinary shares to a major US stock exchange.
To become eligible for inclusion in major stock indices in the US, the company would need to change its premium listing in London to a standard listing, and consequently Ferguson would no longer be eligible for inclusion in the FTSE 100 index.
In this scenario, it is likely that there would be a period of time between the company ceasing to be eligible for a spot in FTSE 100 index and becoming eligible for inclusion in major US stock indices, it noted.
Ferguson said it expects to make a further announcement following the conclusion of the consultation, likely to be in the spring of 2020.
"In assessing Ferguson's future listing structure, the board's approach has been to consider carefully what is in the best interests of the company and its stakeholders over the long-term. The board believes that Ferguson's natural long-term listing location is the USA, but it is mindful that this is a complex issue for many of our existing shareholders. We will now commence a period of further consultation with our major institutional shareholders and will listen carefully to their feedback before setting out any firm proposals in the spring," Chair Geoff Drabble said.
Shares in Ferguson - which is based in Wokingham - were up 5.5% at 7,278.00 pence on Tuesday in London.
By Dayo Laniyan; [email protected]
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