AVONMORE Foods' weighting in the ISEQ Overall Index is set more than double following the group's decision to remove the current distinction between the B ordinary shares held by Avonmore, Creameries and the A ordinary shares held by outside investors.
The two classes per share have existed since Avonmore joined the stock market in 1988 and reflected the lower dividends paid to Avonmore Creameries, which owns all of the B ordinary shares.
The Irish Stock Exchange has only included the A ordinary shares, however, when computing a company's weighting within the ISEQ Index.
Once Avonmore's extraordinary general meeting next month approves the changes to the share structure, the group's weighting in the index will rise from 0.65 per cent to over 1.5 per cent and, in theory at least, make the share" more attractive to funds which track the ISEQ index.
In recent years most of the publicly quoted food companies have moved to create a single category of share. Kerry Group and IAWS have already created such a single class of share as part of their recent corporate restructurings. These allowed the co op holdings in the public company to fall below 51 per cent.
In Dublin, analysts and fund managers have tended to include the A and B shares when working out stock market capitalisation, but in London only the tradeable A shares are used for market capitalisations.
This has meant that the Dublin market has tended to assume that Avonmore's market capitalisation in Dublin is almost £300 million, while the more literal interpretation of the listing rules in London has meant that Avonmore is listed as having a market capitalisation of around £130 million.
That contradictory situation will be rectified once the A and B shares - which have different nominal values - are united as new 5p ordinary shares.
While Kerry's and IAWS's creation of a single class of share was a precursor to a full restructuring to allow the co op shareholding to fall below 51 per cent, Avonmore is, not expected to follow suit - at least in the short to medium term.
Waterford Foods will be the only publicly quoted food company to have a two tier share structure once Avonmore restructures.
Market sources believe that it is only a matter of time before Waterford also simplifies its share structure.
