Atlas Arteria Ltd (ASX: ALX) has just announced a 50% boost to its full-year dividend payouts as it moves to fend off a takeover bid from Diamond Infraco.
Already generous dividend increased further
The toll roads operator previously had a dividend target of 40 cents per share, but on Monday morning, it said in a statement to the ASX that this target would be increased to 60 cents per share.
The company said:
The Independent Directors now intend to target paying distributions to ALX Securityholders of at least 60.0 cents per ALX Security in the 12 months following the end of the Offer Period made up of ordinary distributions of 40.0 cents per ALX Security and additional distributions of at least 20.0 cents per ALX Security. These distributions are expected to be funded by a combination of distributions from Atlas Arteria’s portfolio cash flows, proceeds from potential asset sales and, where appropriate, utilising corporate borrowing proceeds.
The offer period refers to Diamond Infraco’s $5.10 per share takeover offer, which Atlas Arteria’s directors are recommending shareholders reject.
Atlas Arteria said the increased dividends would likely have the effect of reducing dividends further out by 2 cents per share.
The company also said it was engaging in more discussions around asset sales.
The company said:
Atlas Arteria continues to progress initiatives to unlock value from its portfolio of world-class assets. In addition to progressing the potential divestment of the Chicago Skyway, Atlas Arteria has entered into exclusive discussions with Eiffage S.A., a leading French concession and construction group, in relation to the potential sale of Atlas Arteria’s 100% stake in the Warnow Tunnel in Germany. In the event a sale to Eiffage proceeds, Atlas Arteria expects that the sale price will be consistent with the Independent Expert’s range of â¬100m to â¬115m. Warnow Tunnel is the smallest asset in Atlas Arteria’s portfolio, and the possible divestment will not have a material impact on the future strategy of the group.
Diamond Infraco recently said its $5.10 per share offer for the company was its best and final offer.
Shares are worth more, company says
Atlas Arteria said in its statement on Monday that, “the Offer continues to materially undervalue Atlas Arteria and does not reflect an appropriate control premium for ALX Securityholders”.
An independent expert’s report has concluded that the offer is neither fair nor reasonable, and that an appropriate value for Atlas Arteria would be $5.39 to $6.20 per share.
Atlas Arteria shares were changing hands for $5.10 on Monday morning. At that price, the 60-cent per share dividend equates to a dividend yield of 11.8%.
The post How does an 11.8% dividend yield sound? appeared first on The Motley Fool Australia.
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More reading
- Diamond Infraco’s $5.10 offer for Atlas Arteria now unconditional
- Atlas Arteria urges shareholders to reject IFM’s $5.10 takeover bid
- Atlas Arteria: Takeover offer lifted to $5.10 per security
- Atlas Arteria takeover bid extended
- Atlas Arteria reiterates ‘reject’ on IFM bid, maintains 2026 distribution guidance
Motley Fool contributor Cameron England 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 Scott Phillips.