(Bloomberg) -- Shares of Belgian holding company D’Ieteren Group slumped after a member of its controlling family began selling its stake and the company said it would pay almost €4 billion ($4.4 billion) in a special dividend to shareholders using mostly borrowed money.
The stock sank as much as 9.7%, the most in two and a half years, and was trading 7.1% lower at €210.00 at 4:15 p.m. in Brussels.
D’Ieteren, which began as a carriage maker in the Belgian capital in 1805, now distributes Volkswagen cars in Belgium, owns the Moleskine notebook business and runs Belron, a company that repairs car windshields under brand names including Carglass.
The transactions announced late Monday will solidify the control of Chairman Nicolas D’Ieteren. His investment vehicle will buy an almost 17% stake from a firm tied to one of his relatives, Deputy Chairman Olivier Perier, at €223.75 a share, increasing Nicolas D’Ieteren’s holding to 50%. Perier’s ownership will drop to less than 11%, with the remaining shares to be sold over the next five years, the company said.
D’Ieteren will pay a special dividend of €74 a share, financed largely by Belron, which will take on additional debt of about €3.8 billion, according to the statement. The parent company also will raise €1 billion of bank loans.
The transactions are “one of the more aggressive pieces of capital management I’ve seen, especially from bicentennial family-controlled company,” Andrew Brown manager of East 72 Dynasty Trust, said in a post on X. The fund, which invests in companies with controlling shareholders, counts D’Ieteren among its top five holdings, he said.
D’Ieteren said “the once-in-a generation” reorganization will ensure long-term stability of the family shareholding.
Belron, which is 50% owned by D’Ieteren, will pay a €4.3 billion dividend to its shareholders, which also include buyout firms Clayton, Dubilier & Rice LLC and Hellman & Friedman, Singapore sovereign wealth fund GIC Pte and investment firm BlackRock Inc.
Belron will have net debt of €8.9 billion after the borrowing, D’Ieteren said, which can be paid down rapidly over the next few years given its cash generation.
“Some investors might not like the leverage at Belron, certainly not given the economic uncertainty the world is facing,” Kris Kippers, an analyst at Degroof Petercam, said in a note to clients. The reorganization was “very surprising” but offered clear shareholding along with a dividend representing a third of D’Ieteren’s market value, he said.
The news also probably means it’s unlikely that D’Ieteren will conduct an initial public offering for Belron for at least a year, said David Vagman, an analyst at ING.
--With assistance from James Cone.
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