July 17, 2023/Research & Strategy
Futureview Financial Services
Dangote Cement Plc made an announcement to the Nigeria Exchange Limited regarding the initiation of its Tranche 1 Shares Buy-Back Programme on July 7, 2023.
The program involves the purchase of 168,735,593 fully paid ordinary shares, which represents 1% of the total current issued shares. The buy-back program will commence on July 17, 2023, and will be completed within two days or until the entire tranche size has been acquired.
The shares will be purchased from the open market at the NGX. These repurchased shares will be held as treasury shares, in compliance with CAMA regulations. The execution of Tranche 1 is not expected to have a significant impact on the company’s financial position. Shareholders of Dangote Cement who wish to participate in Tranche 1 are advised to seek guidance from their stockbrokers or registered capital market operators authorized by the SEC for assistance in submitting trades on the NGX’s trading platform.
In response to the recent disclosure of Dangote Cement Plc.’s Tranche 1 Shares Buy-Back Programme, investors have raised inquiries about its potential influence on the company’s market price and performance. As a result, this report aims to provide an insightful exploration of share buy-back programs and their consequential effects on investor benefits and the company’s overall performance.
KEY HIGHLIGHT:
- Dangote Cement Plc.’s decision to initiate a share buy-back program comes as a strategic move to address its heavy leverage and uplift investor sentiment.
- A share repurchase reduces the total assets of the business so that its return on assets, return on equity, and other metrics improve when compared to not repurchasing shares.
- Reducing the number of shares means earnings per share (EPS) can grow more quickly as revenue and cash flow increase.
- One of the reasons for the share buyback is to increase long-term shareholder value. Also, the exercise is expected to support the cement manufacturer’s continuous capital structure and balance sheet optimization process.
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