Dangote Cement Plc says it will launch a buyback of the company’s shares to promote the shareholders’ value.
The company in a filing to the Nigerian Stock Exchange said it would repurchase as much as 10 per cent of the issued capital starting with a first tranche of 85.2 million shares of 50 kobo each, or 0.5 per cent of the total in issue.
It was added that the purchase would be done in the open market on December 30 and ends the following day or when the entire target number of shares are repurchased.
Bloomberg reports that Africa’s biggest cement producer obtained the approval of shareholders in January to repurchase some of its shares within a year or at an amended time frame for the purpose of increasing the long-term value of the stock.
Dangote is Nigeria’s first company to undertake the exercise as previous attempts failed due to suspicion by regulators and investors that the process may be abused.
The cement maker had cash and cash equivalent of N176.7 billion ($449.9 million) on its books as of September, its third quarter financial statement shows.
Speaking on the development, Head of Research at Lagos-based Afrinvest West Africa, Abiodun Keripe, explained that the buyback “reflects that the management believes in the valuation and prospects of the company.”
He added that the “Other companies can follow suit, especially for some of those that have a high number of liquid shares outstanding and have been unable to command a very decent valuation.”
Dangote shares rose by 10 per cent to N230.40 at close of trading in Lagos, its biggest advance in five months, on the news of the buyback.