Did the Boral (ASX:BLD) share price really just collapse 40%?

What’s going on with the Boral share price today?

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Key Points

  • Boral shares appeared to tank 40% in morning trade
  • But this followed a capital return and ex-dividend date
  • Eligible shareholders are set to receive $2.72 per share

The Boral Limited (ASX: BLD) share price appears to be one of the worst performers on the S&P/ASX 200 Index (ASX: XJO) today.

The building materials company’s shares are down a mammoth 41.04% to $3.85. This means that its shares are now trading at a 17-month low.

Why are Boral shares in freefall?

But all is not as it may seem. The Boral share price is sinking on Friday after going ex-dividend along with a massive capital return to shareholders.

Earlier this week, management announced a $3 billion return of surplus capital to shareholders following a string of asset sales.

In 2021, Boral offloaded its North American Building Products, 50% owned Meridian Brick businesses, and Australian Building Products businesses.

The company has been busy with its divestment strategy, focusing on strengthening core assets and delivering improved returns.

As of today, each eligible shareholder will receive a total cash distribution of $2.72 per share. This consists of a $2.65 per share equal capital reduction, totalling $2,923 million and an unfranked dividend of 7 cents per share, totalling $77 million. Payment is expected to be made on Monday 14 February.

The decision to distribute the proceeds follows a vote at the company’s annual general meeting in late October.

Boral recently engaged with the Australian Taxation Office (ATO) in regards to the tax implications of the capital reduction.

As such, the ATO confirmed that no part of the capital reduction will be treated as a dividend for Australian taxation purposes.

Boral expects the ATO to issue a class ruling soon in respect to how the income will be treated.

Shareholders can expect to receive the return of capital and dividend on Monday 14 February.

Boral share price snapshot

Due to today’s significant drop, the Boral share price is down 27% over the last 12 months.

When looking year to date, its losses extend to more than 35%.

Based on today’s price, Boral presides a market capitalisation of around $4.34 billion, with over 1.1 billion shares on its books.

Motley Fool contributor Aaron Teboneras 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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