The board of AIB, whose shares have fallen more than 13 per cent in the past month, faces a tough decision in advance of its annual general meeting next Thursday.
As things stand, the bank has a resolution before investors, seeking approval for a €1.2 billion directed buyback of shares from the State – which would reduce taxpayers’ holding in the bank to about 3 per cent.
The minimum price was set a month ago at €6.26 – off AIB’s prevailing market price at the time and before the global stock market rout that followed US president Donald Trump’s “liberation day” tariffs announcement.
However, AIB’s shares have dipped since then and closed on Friday at €5.71, almost 9 per cent below the price that the Government is on track to receive for its shares.
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It has to be said that the world’s two most influential proxy advisory firms, Institutional Shareholder Services (ISS) and Glass Lewis, have recommended that investors back the plan.
But could the board – with its fiduciary duty to all investors, advised by AIB’s corporate brokers Morgan Stanley and Goodbody Stockbrokers – continue to stand behind the resolution if a premium of that scale were to be given to one shareholder? Even if many other shareholders would be glad to see the Government exit as quickly as possible?
Any time the Government has sold AIB shares on the open market in recent years, it has had to accept a discount to get the deal away – as is customary with block placings.
AIB chairman Jim Pettigrew and his chief executive, Colin Hunt, will be hoping that the stock will stage a rally early next week.
The board has until May 8th to ultimately decide whether to go ahead with the plan. That’s the latest date that a buyback can take place under the outlined terms, according to the agm resolution.
However, there is a view in certain quarters of the market that if AIB’s shares were to rally to about €6, the board would have justification in going ahead with the deal. Otherwise, any renegotiation of the terms would require a shareholder vote at an extraordinary general meeting (egm).
