Lausanne-based insurer Vaudoise has made an offer to investors. What this entails, muula.ch investigates.
The news from Lausanne-based property and life insurer Vaudoise came as a surprise on Monday.
Vaudoise Insurance Holding informed that it was launching a program to buy back VAHN shares at a fixed price. This would provide additional liquidity to shareholders wishing to sell at conditions close to the market price, the statement added.
The decision to buy back the shares had already been taken last Thursday, according to the specific offer, which is being handled by Zuercher Kantonalbank ZKB.
The insurer set the price at 402 Swiss francs per class B registered share at a par value of 25 Swiss francs. This represents a premium of 2.81 percent over the closing price on Oct. 28, 2022, and 1.29 percent over the average price of the last five trading days on the SIX Swiss Exchange, the insurance company said.
The company’s current share capital is 75 million Swiss francs, split into 10 million unlisted registered A shares of 5 Swiss francs par value each and 1 million listed registered B shares of 25 Swiss francs par value each.
The repurchase offer at the fixed price is limited to a maximum of 100,000 Class B registered shares (corresponding to 3.33 percent of the capital and 0.91 percent of the voting rights), it also said.
Taxes to be observed
The offer is valid from November 2, 2022 to November 16, 2022. The offer price for the registered shares tendered at the fixed price under the buyback offer is 402 Swiss francs. After deduction of the possible withholding tax of 35 percent on the difference between the repurchase price and the nominal value, the net amount per registered share (net repurchase price) will be only 270.05 Swiss francs.
Vaudoise Versicherungen Holding will buy back the shares for the purpose of capital reduction or to hold them as treasury shares for a period of at least six years from the date of the buyback. They would be cancelled for tax purposes after the buyback, the company explained.
Increase in shares
Founded in Lausanne in 1895, Vaudoise Insurance Group is one of the top ten private insurers in Switzerland. The majority of the share capital of Vaudoise Insurance Holding Ltd. is owned by Mutuelle Vaudoise, a société coopérative, or cooperative.
As of October 27, 2022, the company already held, directly or indirectly, 76,725 own registered shares B, corresponding to approximately 2.6 percent of the capital and 0.7 percent of the voting rights.
Shareholder with more than 3 percent voting rights is Mutuelle Vaudoise, Société Coopérative, with 67.6 percent of the capital and 91.2 percent of the voting rights, the sales prospectus also stated.
With such transactions, there are actually always two main points to consider. muula.ch would like to reward its readers at this point, so to speak. On the one hand, by buying back shares, the insurer is sending a signal. It means that the money is better invested in its own securities than, for example, in growth projects within the Group.
It is therefore more attractive from the point of view of its own Group to buy back the securities at this fixed price in the current environment. However, the premiums offered to investors are anything but lavish in the eyes of muula.ch.
Shortage of money a reason
However, since the insurer believes it is making a good deal with the deal, investors should think carefully about whether they actually need the liquidity in the form of money and thus forego any future increases in value.
Year-on-year the shares have already lost around 13 percent, or 60 Swiss francs. With a payout of 16 Swiss francs there is currently a dividend yield of around 4 percent.
Clever buying and selling
The second point should interest short-term investors even more: The share price rose in the course of Monday after the announcement by about 2 percent to 398 Swiss francs.
So anyone with low transaction costs bought the shares on the stock exchange last Monday morning at around 392 francs, practically risk-free, and can now tender them to the holding company at a fixed price of 402 Swiss francs in a few days’ time. A nice gross profit beckons!
But if the share price falls again in the coming days, the same practically-risk-free business will flourish once more.