Morrisons is reported to be poised to return about £1bn to shareholders when it reveals its full-year results next week.
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It also emerged on Tuesday that founder Sir Ken Morrison had sold most of his remaining individual stake in the retailer he spent 50 years building up, although his family still has a substantial holding.
Royal Bank of Scotland, broker to Morrisons, said it expected the grocer to announce that it was buying back £1bn of shares over the next two years.
It also forecast that Morrisons would unveil a more generous dividend policy, which would cost it about £100m over two years.
Morrison cut his remaining stake from just over 6% to just under 1% in a series of transactions from September 2009 to June 2010. Consequently, the Morrison family has cut its stake from an estimated 16-18% to 9%.
He is likely to face a rap on the knuckles by the Financial Services Authority and could be fined. According to reports, he has broken disclosure and transparency rules that apply to all shareholders who hold more than 3% of a stock.
Morrisons said in a statement on the share sale that it received the information on Tuesday. It said the change to his holding had “arisen as a result of Sir Ken Morrison retiring as one of the trustees of certain family trusts and other estate and tax planning exercises… following his retirement as a director.”