Undervalued Pets at Home accelerates programme of share buybacks
Cheshire-based retail and pet services business Pets at Home is to buy back up to £25m more of its shares in a bid to reduce its issued share capital and return value to shareholders.
The listed pets and vets business announced a robust set of half year results yesterday, absorbing £13m of costs on a new digital programme, and the move to a single distribution hub.
The shares still appear undervalued and analyst Georgia Pettman at Panmure Gordon issued a BUY note yesterday describing the first half performance as “stellar” but that trading at 287p a share was way short of Panmure’s target price of 425p.
The business currently has a market capitalisation of £1.368billion.
This second tranche of the buyback programme will see HSBC buying up shares on the company’s behalf and will make trading decisions independently.
Under the terms of the engagement with HSBC, the Second Tranche Programme will be for a maximum of £25 million and will start today (29 November 2023) and will end on or before 28 March 2024.
The sole purpose of the programme is to reduce the company’s share capital.
The board of directors have decided that the shares purchased in the buyback programme will then be cancelled.
Yesterday, TheBusinessDesk.com reported that Johnson Service Group was undertaking a further share buyback programme.
This morning activist investor Kelso claimed that in the year to date over 30 companies, with a market capitalisation between £50 million and £1 billion, have exited the UK market via acquisition to trade or private equity, in many cases yielding high exit premiums.
Pets at Home also wrote off £1m it invested in pet sitting service Tailster. A spokesperson for the company told TheBusinessDesk.com yesterday: “It invested £1m into the business back in 2019. As the business has now gone into administration, it has written off the initial investment.
“Such early stage, minority investments give it strategic optionality around new areas of a dynamic and growing pet market but unfortunately on this occasion it didn’t work out.”