Essay about Torstar Case Study

1607 Words Dec 26th, 2011 7 Pages
Problem Statement: The problem is determining what form of dividend policy Torstar Corporation should use to best benefit their shareholders while not sacrificing Torstars ability to acquire strategic investments to maintain capital expenditure requirements. This includes determining policies on dividend payouts, stock repurchases stock splits. This case will be analyzed from the point of view of Robert Steacy, Vice-President of Finance of Torstar Corporation.

Background: On April 28th, 1998, Robert Steacy will meet with the board of directors to discuss his memorandum stating the pros, cons and recommendations with respect to the amount of regular dividends, special dividends and share repurchases. This company is a broadly based
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What really happened: According a New York Times Article dated April 30, 1998, Torstar Corporation decided to split its stock 2 for 1, raise its dividend 12 percent and double its stock-repurchase plan for the year to try and increase the company`s share price. (Appendix C)

Torstar General Information
• Published Canada’s Largest Newspaper, The Toronto Star
• Main competitors are Sun Media Corp., the Thomson Group and Southam Inc.
• Prior to 1975, the Toronto Star was the principle activity of Torstar
• Since then, Torstar has expanded their scope drastically through strategic acquisitions to include: o Newspapers (The Star and 42 community newspapers) o Book Publishing (Harlequin Enterprises Limited) o Supplementary Education (Frank Schaffer Publications, Inc., Tom Synder Productions Inc., Delta Education Inc., Troll Communications Inc. and Brighter Vision, Inc. o Recent expansion in the internet and new electronic media market segments when they launched CitySearch and TSTV
• Institutional Ownership (as of March 31, 1998) o Approximately 5,000,000 Class A voting shares (closely held and not traded) o Approximately 34,000,000 Class B voting shares (TSX) o Current institutional holders prefer Torstar’s historical share repurchases and historical dividend payouts to having Torstar acquire investments outside of their core strengths o Buying back shares showed investors

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