Boral (ASX:BLD) share price takes off amid $3b return of capital

Boral shareholders are in for a big pay day…

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Key points

  • The Boral share price is charging higher on Tuesday following the announcement of its capital return
  • Shareholders can expect to receive a $2.65 per share capital reduction and an unfranked 7 cents per share dividend
  • Investors will need to be on the Boral share register by 7 February to receive the payments

The Boral Limited (ASX: BLD) share price is galloping ahead this morning following its announcement of a multibillion-dollar capital return for shareholders.

In early morning trade, shares in the materials company are up 6.8% from their previous close to $6.27. Investors are jumping on the Boral bandwagon as it readies to return $3 billion to its shareholders.

Let’s take a closer look at the details announced today.

Three billion reasons why the Boral share price is higher today

The Boral share price is pushing higher today amid its decision to shower its shareholders in a massive capital return.

According to the company’s announcement, the company will return $3 billion of surplus capital to shareholders. This will be comprised of a $2.65 per share capital reduction and an unfranked 7 cents per share dividend.

Notably, this follows the 2021 annual general meeting where shareholders approved the share capital reduction.

Additionally, the company has worked with the Australian Taxation Office (ATO) to establish the tax implications. It has been confirmed that no part of the capital reduction will be treated as a dividend.

The ATO is expected to issue a class ruling regarding Boral’s capital reduction. This should contain details on how shareholders will need to treat the return.

Moreover, the capital return is a product of Boral’s divestment and sale of its North American building products business. In addition, the capital reduction is on top of a previously announced on-market share buy-back program.

Management commentary

A flurry of various forms of capital return has pushed the Boral share price higher in the past year with the company selling off parts of its business. Boral CEO and managing director Zlatko Todorcevski commented:

In the 12 months following the sale of USG Boral and culminating with the announced sale of Boral’s North American Fly Ash business, we have completed an extensive portfolio realignment, unlocking significant value for our shareholders. Our reshaped portfolio allows us to focus on strengthening the performance and profitability of our core Australian construction materials business.

What’s next?

Lastly, it is worth highlighting the key dates for the capital return to take place.

Tomorrow, 2 February 2022, will be the effective date for which the share capital reduction is carried out. Following that, 4 February will see the first day of trading for shares ‘ex return of capital’.

Importantly, Monday 7 February will be the record date for eligibility of the capital return. Shareholders will need to be on the share register by this date to be a part of the $3 billion bonanza.

Finally, Monday 14 February is the date shareholders will receive the return of capital and dividend.

The Boral share price is up more than 25% in the past 12-months.

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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