Share buy-back: Dangote Cement share price rises
THE share price of Dangote Cement Plc has increased to N142 in two days following the company’s announcement of its share buy-back scheme.
Dangote Cement had on December 27, 2019 revealed plans to buy back 10 per cent of its entire issued shares from shareholders.
The company said in a notice, which was filed at the Nigerian Stock Exchange on Friday, that the decision to buy back shares was aimed at improving return on equity.
Dangote Cement, which currently has 17.04 billion fully paid-up ordinary shares of 50 kobo each, would be buying back 1.70 billion shares.
It said the share buy-back was going to be on terms and conditions determined by the board of directors.
On Monday, the trading volume of Dangote Cement shares increased to 11 million from about one million or less previously recorded while the share price increased to N141.50.
On Tuesday, 17 million shares of Dangote Cement were traded on the floor of the exchange as the share price climbed to N142.
The N142 share price was sustained on the first trading day of the year 2020 as about two million shares were traded.
According to the notice, the buy-back programme will be completed within 12 months from the date of receipt of the approval of shareholders for the programme.
The notice read in part, “Unless required by law or directed by appropriate regulatory authority, the company may cancel such number of issued shares repurchased, or otherwise acquired under the proposed transaction as confirmed by the company’s registrar and diminish the amounts of its share capital by the amount of its shares so cancelled, in accordance with all applicable laws and regulations.
“The shares will be repurchased out of the profits of the company and such number of shares bought under the programme is required to be cancelled in accordance with the Securities and Exchange Commission rules and the Nigerian Stock Exchange Rulebook 2015, which will consequently lead to a reduction in issued share capital.”
The company said the share buy-back also aimed to improve shareholder value in order to facilitate long-term growth.
It added that the selftender offer price would be determined by the board, but would not be more than five per cent of above the average calculated market price over the five days preceding the offer.