Photo: Ryan Remiorz, The canadian Press
The chairman of the board and co-ceo of Power Corporation, Paul Desmarais, jr.
Buy massive shares will take place within Power Corporation. In the end, the sale of assets of the Great-West in the United States will allow the Desmarais family to increase its influence on the holding company. Power Corporation announced on Monday its intention to repurchase for cancellation up to $ 1.35 billion of its shares with limited voting rights. It is estimated that this offer in the current context of the market “represents a good use of our resources in terms of capital,” said Paul Desmarais, jr., chairman of the board and co-chief executive officer. The controlling shareholder does not intend to participate. By doing so, it plans to increase its proportionate interest in the company, ” he said.
This transaction dominates a string of repurchase of shares within the portfolio. Power Financial has announced its intention to buy back up to $ 1.65 billion of its shares, a decision that is based on that of the Great-West to remit to its shareholders of up to $ 2 billion, also in the form of stock buybacks. This last reminds us that it has received $ 1.6 billion from the sale, in January last, of its insurance operations-life and annuity in the United States. The announced share buyback enables it to return capital to its shareholders and to mitigate the effects on the profit of this sale. Great-West already had a cash and cash equivalents of $ 4.2 billion at the end of 2018.
The voting shares restricted Power have a right to vote per share, compared with ten for the participating shares held by the controlling shareholder. Thus, majority control is exercised through ownership of a little over 11 % of the shares with voting right in circulation. Depending on the price of redemption, this weight would increase by about three percentage points.
The voting share limited closed Monday at 28,94 $, with an increase of 2.4%, or 69 ¢. It has hit a peak of a little over $ 30 in the last 52 weeks, more 33,50 $ over three years, plus $ 34 in five years. According to the data displayed on the website of the stock Exchange of Toronto, it offers a dividend yield of 5.7 % and is trading at a price to earnings ratio of 10.4 times.