Orora (ASX: ORA) shares are up after announcing a big special dividend for shareholders.
What is Orora?
Orora is a global packaging business which provides a range of packaging solutions and displays. Its products include glass bottles, aluminium cans, closures & caps, recycled paper, point-of-purchase displays, boxes & cartons, rigid packaging, flexible packaging, bags and sacks. The company operates in seven countries with nearly 7,000 employees. It has 47 manufacturing plants and 23 distribution sites.
Orora is holding an extraordinary general meeting today.
The Orora leadership reminded investors that it sold its Australasian fibre business to a subsidiary of Nippon Paper Industries for $1.72 billion with net proceeds after tax and costs of around $1.55 billion.
Management said the sale represented compelling value for shareholders and enhanced the company’s balance sheet to fund growth investment and/or capital management from surplus sale proceeds and operating cashflows.
Orora now has its Australasian Beverage business and North American business. The beverage business has the number one market position for cans and glass wine bottles and number two for glass beer bottles and wine closures. The North American business comprises Orora Packaging Solutions and Orora Visual. OPS is a top five business in the US$50 billion North American packaging distribution segment and OV is a top five business in the US$10 million point of purchase and displays segment.
Orora’s special dividend
The Orora board decided to return excess capital to shareholders. The company will return $600 million in total to shareholders. The first $450 million will be in the form of a special dividend, which is 37.3 cents per share, partially franked at 50%.
The business will also do a capital return of $150 million in the form of a cash payment of 12.4 cents per share.
Orora is now operating with little to no debt. If the company can’t find growth opportunities it will consider further capital returns to shareholders.
I think Orora could be worth buying today, the dividend and capital return appears to amount to a very large partially franked yield and the company can keep generating normal profits and paying normal dividends into the future.
Disclosure: At the time of writing, Jaz doesn’t own shares in any of the businesses mentioned.