Vita (ASX:VTG) share price sinks on asset sale and special dividend

Vita plans to sell its Telstra-branded stores and its Sprout business for $110 million.

| More on:
man looks at phone while disappointed

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

sdf

The Vita Group Limited (ASX: VTG) share price is sliding today as the company plans to sell assets, giving more than half the profits back to its shareholders.

Vita is selling its retail information and communication technology segment to Telstra Corporation Ltd (ASX: TLS). The sale is expected to bring in a cool $110 million.

At the time of writing, the Vita share price is trading at 88 cents, 4.86% lower than its previous close.

Let's take a closer look at today's news from Vita.

Vita's asset sale

The Vita share price is sinking on news it plans to sell its Telstra-branded stores and Sprout business for $110 million cash.

The cash consideration is still subject to a net working capital and net-debt adjustment. That will be finalised late this month.

Currently, Vita operates 104 Telstra-branded stores. The deal under which Vita operates the shops took a blow in February when Telstra announced it would fully own all Telstra stores by 2025.

It appears that Vita has run out in front, selling the portfolio, alongside its technological accessory brand, Sprout, to Telstra.

Of the $110 million to be received from the sale, Vita will keep $35 million. The remaining sale value – between $65 million and $75 million – is expected to be handed back to shareholders in the form of a special dividend.

The fully franked special dividend will be worth 39 cents to 45 cents per share and paid in 2 payments.

Vita advised that the $35 million kept in the company's coffers would go towards growing its Artisan Aesthetic Clinics business.

The sale is subject to shareholder approval.

Additionally, Vita has confirmed that none of its employees will lose their jobs due to the sale. They will continue to be employed by the Vita People entity, which will be owned by Telstra.

Vita share price snapshot

Today's dip is just the latest fall for the Vita share price, which has sunk 18.9% since the start of 2021. Vita shares are also 18.2% lower than this time last year.

Motley Fool contributor Brooke Cooper 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 owns shares of and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

A young man wearing a black and white striped t-shirt looks surprised.
Broker Notes

These ASX 200 shares could rise 25% to 80%

Analysts think big returns could be on offer from these shares.

Read more »

The silhouettes of ten people holding hands with their arms raised against the sky, as the sun rises or sets in the background.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors were nervous this Friday, ending the week on a sour note.

Read more »

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
Share Market News

Where to invest $5,000 into ASX 200 shares this month

The team at Bell Potter is bullish on these names. But why?

Read more »

Man pointing an upward line on a bar graph symbolising a rising share price.
52-Week Highs

8 ASX 200 shares hitting multi-year highs today

These shares have defied the trend, hitting new price milestones amid a day in the red for the ASX 200.

Read more »

Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man punches the air in delight as he reacts to great news on his mobile phone.
Share Gainers

Why EOS, Evolution Mining, Renascor, and Woodside shares are jumping today

These shares are ending the week on a high. But why?

Read more »

Person with thumbs down and a red sad face poster covering the face.
Share Fallers

Why Accent, Cettire, Ioneer, and Pro Medicus shares are dropping today

These shares are ending the week in the red. What's going on?

Read more »

A group of three miners in hard hats and high visibility vests confer at a rocky mining site.
Broker Notes

Up 66% in a year, just how much more upside does Macquarie tip for Perseus Mining shares?

Just how much higher might Perseus Mining shares soar? Here’s what Macquarie had to say about the ASX 200 gold…

Read more »