Both Class A and Class B common stock will participate in the stock split, which is being treated as a stock dividend. For every four shares of Class A or Class B held, shareholders of record on Feb. 7 will receive one share of Class B common. Fractional shares will be paid in cash. Payment will be on Feb. 28.
The company noted that this will be the 14th stock split since the company’s listing in 1934. “Assuming there had been no splits over that period, on share of Class B common would be worth approximately $189,000 today,” it added.
On April 23, the company will pay a special dividend of $1 on both Class A and B shares of record April 2. “This equates to roughly $480 million after the implementation of the stock split,” the company said.
Brown-Forman’s board also decided to fully fund its current $120 million pension liability, “further strengthening an important employee benefit.”
Additionally, with the goal of helping to fund the company’s ongoing philanthropic endeavors in the communities where Brown-Forman employees live and work, the company is pursuing the creation of a foundation with a contribution of $60-$70 million. The company anticipates that the foundation’s proceeds will provide a consistent amount of revenue per year for its charitable giving program independent of the company’s yearly earnings.
Brown-Forman’s Board of Directors also declared a regular quarterly cash dividend of 15 4/5 cents per share on its Class A and Class B common stock, reflective of the planned five for four stock split. Stockholders of record on March 5, 2018 will receive the cash dividend on April 2, 2018.
“These capital deployment actions underscore the strength of the company’s balance sheet and health of our business, and are augmented by the anticipated benefits due to tax reform,” said Paul Varga, ceo. “We believe the last many years of significant capital investment and portfolio reshaping have helped position our company for a continuation of the comprehensively strong results that Brown-Forman has historically enjoyed. Today’s announcement is reflective of the breadth and balance of stakeholder value we strive to create over time.”