Westpac Bank (WBC) has announced it will be undertaking a $3.5 billion off-market buy-back and are offering shareholders at 8 November 2021, the opportunity to participate. Eligible shareholders will receive information about the offer from the WBC share registry, how to access the buy-back booklet and how to participate.
The buy-back is open for participation from 17 November and closes on 17 December 2021.
The offer is to buy the shares back off you at a discount to the market price. The incentive to sell your shares at a lower price than the current market price, is that of the price you receive, a significant portion will be a fully franked dividend.
While much of the price received for your shares will be a dividend attracting franking credits, the transaction may also create a capital loss which can be used to offset capital gains you may have, or think you may create, on the sale of other investments in this 2021/22 or future financial years.
For WBC shareholders with a $0% tax rate (individuals or superannuation pension funds) this could be worth considering.
Our preliminary calculations suggests however that even on the 0% tax rate, the tax benefits appear marginal. Based on recent experience with CBA and Woolworths buy-backs, these also tend to be heavily scaled back (at least 70%) and only a portion of your shares are likely to be successfully bought back.
As a result, we do not intend to contact clients individually to discuss the merits of the buy-back as they apply to you.
If you sell your shares, but ultimately wanted to maintain your holding of WBC long term, you would need to re-buy them on market, which would incur a brokerage trading cost.
More Information
If you would like TAG Financial Services to work out the implications based on your current situation, please contact Leigh Jobling or Arden Shaw. We can calculate the cost/benefit for you to assist you to make an informed decision.
If you receive investment advice from another adviser (e.g. a stockbroker), we encourage you to contact them.
If you wish to participate in the buy-back, you need to follow the instruction on the letter you receive. You can submit your tender online or download the tender form – to be completed and returned to the share registry by 5.00pm Friday 17 December 2021. We suggest you take the necessary action well in advance.
If you have any questions, please contact your TAG adviser by email or call 03 9886 0800.
Disclaimer: This is general information only and is not advice to participate in the WBC buy-back, or to buy hold or sell any shares in WBC, as we have not taken your personal circumstances into account. Whether participating in the buy-back is appropriate for you will depend on your personal circumstances and we encourage you to seek advice before acting on this information. If TAG Financial Services are your investment advisers, we welcome your call. If you use your own share broker, you should speak with them, or we would be pleased to discuss the mechanics of the buy-back with you. There are numerous different options for participating in the buy-back, however we have only selected one for illustrative purposes only.