Ferguson plc: New Corporate Structure to Achieve U.S. Domicile
- None.
- Tax reforms in the UK and Switzerland relating to global minimum tax policies are expected to reduce the benefit of the current structure, resulting in an approximately 26% adjusted effective tax rate for the fiscal year ending July 31, 2025. The impact of establishing US TopCo, which will have a US tax domicile, on the prospective adjusted effective tax rate and the Company’s financial results is considered immaterial by the Board.
Insights
The decision by Ferguson plc to re-domicile its ultimate parent company to the United States represents a strategic move that is likely aimed at aligning the company's corporate structure with its operational footprint and shareholder base. The establishment of a new Delaware corporation, US TopCo, as the parent company entails a significant change in the company's legal and regulatory environment. This transition could potentially streamline governance processes, given that over two-thirds of Ferguson's shareholders are now American and the company already has U.S. domestic status under SEC rules.
From a financial perspective, the move is neutral in terms of equity since no additional shares will be issued. However, the listing of US TopCo's common stock on both the NYSE and LSE could improve liquidity and possibly enhance the stock's appeal to a broader range of investors. The tax implications appear to be minimal, with the Board projecting an adjusted effective tax rate that is comparable to the current structure, even with global minimum tax policies coming into effect. Investors should monitor the company's forthcoming proxy statement for detailed financial implications and the potential impact on share valuation.
The legal intricacies of Ferguson's proposed corporate restructuring involve multiple jurisdictions, including the US, UK and Jersey. The necessity for shareholder approval with at least two-thirds majority according to the company's Articles of Association and Jersey law underscores the importance of corporate governance and shareholder rights in such transactions. Furthermore, the regulatory filings or registrations with US, UK and Jersey regulators highlight the complex compliance requirements associated with international business operations.
The legal process will be scrutinized to ensure it adheres to the regulatory standards of each jurisdiction and the timeline provided suggests a methodical approach to the merger process. Stakeholders should pay close attention to the transaction's legal documentation, as it will contain critical information regarding the governance of US TopCo and any changes in shareholder rights or protections.
The strategic relocation of Ferguson's parent company to the US reflects broader market trends where companies seek to align their corporate structure with their primary operational markets. This move could be interpreted as a response to the evolving global tax environment and the need to optimize corporate governance. For the market, such restructurings are generally viewed as a commitment to long-term strategy and may signal confidence in the North American market's growth potential.
However, it's essential to consider the potential market reaction to this news. While the Board does not foresee any material downsides, investors and analysts will be evaluating the implications for the company's future international expansion and how the new structure might affect its global competitiveness. The upcoming special shareholder meeting and the subsequent vote will be pivotal in gauging market sentiment towards this restructuring.
WOKINGHAM,
Transaction Process & Timeline
The new corporate structure would be accomplished through a merger process by which the Company would become a direct wholly owned subsidiary of a new
No additional equity would be raised by US TopCo as part of the transaction.
The transaction will require filings, or registration, with US,
The overall timeline for the transaction is expected to be:
- Mid/Late April 2024: Proxy Statement and Notice of Meeting issued to shareholders
-
Late May 2024: Special meeting of shareholders held in
London - August 1, 2024: Effective date of the transaction; Company shares exchanged for US TopCo shares; US TopCo shares begin trading on the NYSE and LSE
No action is needed by shareholders at this time.
Natural Next Step
Since 2019, the Board has considered
The Board believes that the establishment of US TopCo is the next natural step and will simplify the Company’s corporate governance requirements.
The Board also does not foresee any material downsides to making this change. Tax reforms in the
Additional Information Forthcoming
More specific details about the transaction and any expected impacts on the Company and its shareholders will be provided later in the US registration statement, which will include a proxy statement for the special meeting, and the
The Company expects to provide a progress update on the transaction on March 5, 2024 in connection with its Q2 earnings release and conference call.
Important Information for Investors and Shareholders
This communication does not constitute an offer to sell or the solicitation of an offer to buy or exchange any securities or a solicitation of any vote or approval in any jurisdiction. It does not constitute a prospectus or prospectus equivalent document. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the US Securities Act of 1933, as amended.
In connection with the transaction described herein, US TopCo and the Company intend to file relevant materials with the SEC, including, among other filings, a US TopCo registration statement on Form S-4 that will include a proxy statement of the Company that also constitutes a prospectus of US TopCo, and a definitive proxy statement/prospectus, which will be mailed to shareholders of the Company. INVESTORS AND SECURITY HOLDERS OF THE COMPANY ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS THAT WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders will be able to obtain free copies of the registration statement and the proxy statement/prospectus (when available) and other documents filed with the SEC by US TopCo or the Company through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by US TopCo or the Company will be available free of charge on Company’s website at corporate.ferguson.com under the tab “Investors” and under the heading “Financial Information” and subheading “SEC Filings” or by contacting the Company’s Company Secretary in writing by mail at 1020 Eskdale Road, Winnersh Triangle, Wokingham,
Certain Information Regarding Participants
The Company, US TopCo, and their respective directors and executive officers may be considered participants in the solicitation of proxies from the shareholders of the Company in connection with the transaction. Information about the directors and executive officers of the Company is set forth in its Annual Report on Form 10-K for the year ended July 31, 2023, which was filed with the SEC on September 26, 2023 and its proxy statement for its 2023 annual general meeting, which was filed with the SEC on October 17, 2023, and its Current Report on Form 8-K, which was filed with the SEC on January 12, 2024. To the extent holdings of the Company’s securities by its directors or executive officers have changed since the amounts set forth in such 2023 proxy statement, such changes have been or will be reflected on Initial Statements of Beneficial Ownership on Form 3 or Statements of Beneficial Ownership on Form 4 filed with the SEC. Information about the directors and executive officers of the Company and US TopCo and other information regarding the potential participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement/prospectus and other relevant materials to be filed with the SEC regarding the transaction when they become available. You may obtain these documents (when they become available) free of charge through the website maintained by the SEC at http://www.sec.gov and from the Company Secretary at the Company as described above.
Cautionary Note Regarding Forward-Looking Statements
Certain information in this announcement is forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to the process and timetable for the transaction and the benefits of the new corporate structure. Forward-looking statements cover all matters which are not historical facts and speak only as of the date on which they are made. Forward-looking statements can be identified by the use of forward-looking terminology such as “intend,” “will,” “plan,” “would,” “believe,” “expect,” “anticipate,” “may” or other variations or comparable terminology. Many factors could cause actual results to differ materially from those in such forward-looking statements, including, but not limited to: the transaction may be delayed, cancelled, suspended or terminated; the conditions to the completion of the transaction, including shareholder approval, may not be satisfied; the benefits of the transaction may not be realized; weakness in the economy, market trends, uncertainty and other conditions in the markets in which we operate, and other factors beyond our control, including disruption in the financial markets and any macroeconomic or other consequences of political unrest, disputes or war; failure to rapidly identify or effectively respond to direct and/or end customers’ wants, expectations or trends, including costs and potential problems associated with new or upgraded information technology systems or our ability to timely deploy new omni-channel capabilities; unsuccessful execution of our operational strategies; changes in, interpretations of, or compliance with tax laws in the US, the
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Investor Inquiries
Brian Lantz
Vice President, IR and Communications
+1 224 285 2410
Brian.lantz@ferguson.com
Pete Kennedy
Director, Investor Relations
+1 757 603 0111
Peter.kennedy@ferguson.com
Media Inquiries
Christine Dwyer
Senior Director, Communications and Public Relations
+1 757 469 5813
Christine.dwyer@ferguson.com
Source: Ferguson plc
FAQ
What is the new corporate structure Ferguson plc is considering?
When is the transaction process expected to be completed?
What will shareholders receive as part of the new corporate structure?
Why is the establishment of US TopCo considered the next natural step?
What is the impact of tax reforms in the UK and Switzerland on Ferguson plc?
