Irish books and stationery retailer Eason will hold an extraordinary general meeting next month to seek approval for a share buyback scheme of up to €10 million that would allow some of its 230 family shareholders to dispose of their holdings in the business.
The EGM has been set for April 11th, according to documents sent to shareholders last week.
Eason chairman David Dilger said the buyback scheme was the “best and most effective strategic option” for shareholders to obtain some value from their holdings. He said a number of “strategic options” had been considered over the past two years, including a trade sale of the business.
Last September Mazars valued the trade of Eason at €39.9 million, reflecting its Ebitda (earnings before interest, tax, depreciation and amortisation) and applied industry multiples.
“This included engaging with a number of potential professional investors who recognised the quality of the Eason business and acknowledged it as being well run by the board and management team with incremental opportunities to add value confined to synergistic opportunities for those operating in the same or related marketplace,” Mr Dilger told shareholders.
“In the future there is always a possibility that the Eason business will be strategically acquired by a third party but the board are not in a position to provide an insight into the probability or timing of such an event.”
In addition to the near €40 million value of the trade, the documents note that the two remaining properties owned by Eason – it’s flagship store on O’Connell Street in Dublin city centre and an outlet in Blanchardstown – were valued at €22.5 million by Mazars while it also has €9.2 million in surplus cash.
If the buyback proposal is approved, this would bring the total amount distributed to shareholders in dividends and equity release events since 2020 to €55 million. This includes a €4 million special interim dividend paid in December 2024.
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Mr Dilger said the business now has a level of surplus capital that is unlikely to be required, with the business expected to generate Ebitda of about €8 million a year, and cash flow of €3 million-€4 million annually.
This first phase of the buyback scheme would involve up to 3 million shares, representing 15 per cent of the total issued share capital of Eason Retail plc. A further 2 million shares could be acquired over the next 18 months.
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The buyback price has been set at €2 per share, an 11.7 per cent uplift on the €1.79 per share, valuation provided by Mazars last September. Eason is a privately owned company, in spite of the plc status implied by its name. As such, it can be difficult for shareholders to sell their holdings in the company.
Mr Dilger said the board of Eason was recommending that all shareholders vote in favour of the buyback scheme.
“However, it is important to note that no board member currently intends to participate in the share buyback. Board members are confident that the company will, in the long-term, provide returns commensurate with the entire intrinsic value of the business and, therefore, remain less than interested in selling their shares at a value (even under the proposed buyback terms) which incorporates a significant discount for illiquidity and minority shares status,” he said.
