Kesa Electricals plc demerger

 

On 7 July 2003, Kingfisher demerged its electricals business and the new Kesa Electricals plc shares were then separately listed on the London Stock Exchange and on Euronext Paris. Kingfisher shareholders received one Kesa Electricals ordinary share of 25 pence nominal value for every five Kingfisher ordinary shares of nominal value 13.75 pence each. On the same date, the Kingfisher ordinary shares of 13.75 pence each were consolidated into Kingfisher ordinary shares of 15 5/7 pence each. Shareholders received seven consolidated Kingfisher ordinary shares of 15 5/7 pence each for every eight Kingfisher ordinary shares of 13.75 pence each.

US shareholders: Important tax information on Kesa Electricals demerger

The table below illustrates the number of consolidated Kingfisher Shares and consolidated Kesa Shares that shareholders with different numbers of Kingfisher Shares will hold following the demerger and the share consolidations.

Before the Demerger and Share Consolidations After the Demerger and Share Consolidations
Current holding of Kingfisher Shares Consolidated Kingfisher Shares of 15 5/7p received Consolidated Kesa Shares of 25p received
1 0 0
2 1 0
5 4 1
10 8 2
50 43 10
100 87 20
250 218 50
5,000 4,375 1,000

For further information, please refer to the:

Post the Kesa Electricals demerger from Kingfisher plc, how was the base cost of my shareholding between the new Kingfisher shares and the new Kesa Electricals shares split?

IMPORTANT: The following information is intended as a general guide only and is based on current legislation. The information is relevant to individuals who are resident or ordinarily resident in the U.K. for tax purposes, who are the beneficial owners of their shares and who hold their shares as investments. It should be read in conjunction with the more detailed information contained in paragraph 5 of Part 5 of the circular to shareholders dated 17 June 2003. Kingfisher accepts no responsibility for the use that may be made of this information. Anyone who is in any doubt as to their taxation position should consult an appropriate professional adviser.

The aggregate base cost for the purposes of taxation of chargeable gains of the Kingfisher ordinary shares and the Kesa Electricals shares immediately after the demerger and share consolidations should be the same as the base cost of the Kingfisher ordinary shares immediately before the demerger. The base cost should be apportioned between the Kingfisher ordinary shares and the Kesa Electricals shares by reference to their respective market values on the first day on which market values or prices are quoted or published for such shares. The precise basis on which the apportionment should be done will depend on a number of factors, including the type of share pool or holding the Kingfisher shares comprised for the purposes of the capital gains tax legislation.

The market value is found by taking the lower of:

  1. the lower of the two prices shown as the quotations for the shares on the London Stock Exchange Daily Official List plus one quarter of the difference between those two figures,

    and

  2. the halfway point between the day high and the day low.

From the London Stock Exchange Daily Official List for 7 July 2003:

Kingfisher plc

Closing spread Low High
(b) is lower than (a) therefore market value is 279.50p
282.75 — 285.25 270.75 — 288.25
(a) = 283.375 (b) = 279.50

Kesa Electricals plc

Closing spread Low High
(a) is lower than (b) therefore market value is 191.875
191.25 — 193.75 186.50 — 202.00
(a) = 191.875 (b) = 194.25

Simplified example:
Before the demerger on 7 July 2003, a shareholder had 2,000 Kingfisher shares, having an aggregate base cost of £5,000.00.

Following the demerger and the share consolidation, the shareholder has 1,750 Kingfisher shares and 400 Kesa Electricals shares.

The base cost of the 1,750 consolidated Kingfisher shares would be:

(279.50 x 1750)
((191.875 x 400) + (279.50 x 1750))
x £5000.00 = £4,321.85

(i.e. 86.44% of the aggregate base cost)

Note: Proceeds from the sale of any fractional entitlement arising from the Kingfisher share consolidation should also be deducted in order to determine the base cost.

The base cost of the 400 new Kesa Electricals shares would be:

(191.875 x 400)
((191.875 x 400) + (279.50 x 1750))
x £5000.00 = £678.15

(i.e. 13.56% of the aggregate base cost)

Note: Proceeds from the sale of any fractional entitlement arising from the Kesa Electricals share consolidation should also be deducted in order to determine the base cost.