Dangote Cement shareholders on Wednesday unanimously endorsed the company’s share buyback plans to be completed in 12 months.
The shareholders gave the approval at the company’s Extra Ordinary General Meeting (EGM) held in Lagos.
Share buyback, also known as a share repurchase, is when a company buys its own outstanding shares to reduce the number of shares available on the open market.
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Companies’ buyback shares for a number of reasons, such as to increase the value of remaining shares available by reducing the supply or to prevent other shareholders from taking a controlling stake.
The News Agency of Nigeria (NAN) reports that Dangote Cement, which currently has 17.04 billion fully paid up ordinary shares of 50k each, would be buying back 1.70 billion shares.
Speaking at the meeting, the shareholders commended the company’s board and management for coming up with another scheme that would enhance share value and as well ensure more returns on their investment.
Specifically, Mr Sunny Nwosu, Founder, Independent Shareholders Association of Nigeria, said shareholders would forever appreciate the “share buyback” plan of the company, especially at this time of the year.
“I think Alhaji Aliko Dangote is learning from Microsoft, where Bill Gates also buy back shares of Microsoft.
“I want to sincerely congratulate Aliko on this noble idea.
“In 2008, Independent shareholders Association sponsored a seminar on share buyback because of its value and importance.
“As shareholders, we have been clamouring for share buyback for so many years, and today Aliko Dangote has given us hope.
“This is very good as against the practice of share reconstruction that is being practiced by some Nigerian companies which never gave back anything positive to the shareholders.
“The ‘share buyback’ was practiced in Ghana with just few companies listed on its Exchange.
“We are indeed very happy with this and we are also quite sure that with this that you have done today, you have proved yourself to be the best chairman of all the corporate companies in Nigeria.
“We are very delighted because we know that, this arrangement will lead to share price increase and more dividends for the shareholders,” Nwosu said.
He, however, encouraged other quoted companies to embrace the initiative instead of share reconstruction.
Earlier, Alhaji Mohammed Audu, President, Authentic Nigerian Shareholders Association, lauded the company for embracing share buyback.
Audu urged the company to ensure that money realised from the exercise would be used for investment purposes.
“The share buyback will ensure that the value of our share will go up and we are also sure of getting better dividend,” he stated.
The company’s Chairman, Alhaji Aliko Dangote, said that the shares would be repurchased out of the profits of the company.
He noted that number of shares bought under the programme was required to be cancelled in accordance with the Securities and Exchange Commission (SEC) rules and the Nigerian Stock Exchange (NSE) Rulebook 2015.
This, according to him, will consequently lead to a reduction in issued share capital.
News Agency of Nigeria(NAN) also reports that the share buyback was going to be on terms and conditions determined by the board of directors.
The buyback programme would be completed within 12 months from the today. (NAN)
Source: Business Hallmark