May 21, 2020 / 12:03 PM / 2 months ago

Campari says office shift abroad unlikely after virus lifts cost of move

FILE PHOTO: Campari bottles are seen in a bar downtown Milan, Italy, September 4, 2018. REUTERS/Stefano Rellandini

MILAN (Reuters) - Italy’s Campari (CPRI.MI) said it was likely to ditch for now a plan to move its registered office to the Netherlands after a drop in its share price driven by the COVID-19 crisis gave its shareholders an incentive to opt out of the scheme.

A 20% fall in the value of Campari shares to 6.90 euros caused by lockdown measures to contain COVID-19 contagion made it profitable for shareholders to exercise withdrawal rights and have their holdings liquidated in cash.

That has lifted the cost of the plan for the company above what Campari was prepared to spend.

The maker of Aperol aperitif said in February it planned to move its registered office to the Netherlands and introduce an enhanced loyalty share scheme.

Campari said on Thursday shareholders had exercised their right to withdraw, tendering 46 million shares for an aggregate withdrawal liquidation price of 385.36 million euros ($423.70 million).

That is much higher than a maximum amount of 150 million euros that Campari has said it would spend to buy any withdrawn shares that remain unsold at the end of a complex re-selling procedure during which stock will be purchased at the withdrawal price of 8.376 euros.

That is the case even after taking into account the 76.5 million euros that Campari’s top shareholder LagFin has pledged to spend to buy withdrawn shares.

Campari said it would likely scrap the transaction and propose it again once market conditions stabilise.

In the unlikely event that the aggregate withdrawal cost does not exceed the 150 million euro cap, Campari said it would ask its investors to axe the plan anyway at a extraordinary shareholders meeting to be held on June 30.

Reporting by Francesca Landini; Editing by Elaine Hardcastle

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