I don't have experience of similar actions from the past and I'm struggling to work out what the point of this is. Anyone help me (and presumably others)?
The Aviva calculator shows that the target for the action is that shareholders will be in the same position (total value) after the action. Shareholding worth less (because value of company drops by the amount of capital being returned) plus cash making up the difference to shareholding value prior to the action. My own calcs just using current market cap, number of shares, value of capital returned and ratio of new to old shares says the same. No surprises.
So, if I've understood right, this is no different than a small investor selling a chunk of their current holding. I say small because presumably if a large block (such as the activists pushing for this type of return) sold, the SP would drop.
The only possible advantage I can see is if the total dividend is maintained or improved. But that's an unknown as we don't know future dividends, just the strategy.
Apart from that, as some of the posts seem to suggest above, it's then speculation as to whether (post-action) the market magically thinks that Aviva is then worth more than its fair value. That seems counterinuitive since the business is the same.
The SP has not rocketed up since this was announced, so presumably I'm not far off in my assessment or everyone would be scooping up shares.
Genuinely perplexed as it just seems I'm effectively being made to sell part of my shareholding with no definite advantage. Plus complications of ensuring that I'm actually going to get the cash (need to contact broker to understand whether it's paid to the or I need to register with Aviva) plus tax implications. And possibly then trading costs if I actually want to maintain my holding in Aviva at the same level.
Stuart