The Boral Limited (ASX: BLD) share price has been one of the worst performers on the S&P/ASX 200 Index (ASX: XJO) in recent times.
The building materials company's shares hit a 20-month low of $3.26 yesterday despite not releasing any news to the ASX.
The fall represents a decline of 47% since the start of February – a little more than a month ago.
Image source: Getty Images
Why are Boral shares in freefall?
The Boral share price has been heavily sold off since the massive capital return to shareholders was announced on 1 February.
At the time, management advised it would return $3 billion of surplus capital to shareholders following a string of asset sales.
The capital return involved each eligible shareholder receiving a total cash distribution of $2.72 per share. This comprised a $2.65 per share equal capital reduction, totalling $2,923 million and an unfranked dividend of 7 cents per share, totalling $77 million.
The Boral share price plummeted more than 40% on 4 February, which management said reflected "the $2.72 return of surplus capital to shareholders with shares going 'ex return of capital' and 'ex dividend'."
Boral paid the cash distribution to shareholders on 14 February.
In 2021, Boral offloaded its North American Building Products, 50% owned Meridian Brick businesses, and Australian Building Products businesses.
The company has been busy with its divestment strategy, focusing on strengthening core assets and delivering improved returns.
The decision to distribute the proceeds follows the vote in favour at the company's annual general meeting in late October.
Boral recently engaged with the Australian Taxation Office (ATO) in regards to the tax implications of the capital reduction.
As such, the ATO published a class ruling that stated no part of the return of capital will be assessable as a dividend for Australian taxation purposes.
Boral share price snapshot
After a month of heavy losses, the Boral share price is down 35% over the last 12 months. In comparison, the S&P/ASX 200 Materials (ASX: XMJ) sector is up 13% over the same timeframe.
Based on valuation grounds, Boral presides a market capitalisation of around $3.79 billion, with over 1.1 billion shares on its books.
