I would suggest that it would be in the best interests of PRG for SKE to payout the 25c cash component as a ff special dividend. Based on:
HOWEVER, I am not a tax or take-over lawyer and there may likely be other considerations.
- If PRG don't pay 25c/share as a merger-t/o consideration it may reduce their exposure to taxes (particularly stamp duty)
- Payment out of the SKE purse will, in essence, add to their total debt (well, at least not reduce it), giving PRG a larger tax deductibility on debt costs - maybe
- It will isolate the payment to the SKE business books, allowing the directors to distance themselves from any negativity arising from the numbers therein
- It will reward shareholders with additional franking credits not available as a t/o consideration
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