Dangote Cement shares jumped the maximum 10% on Monday on the first trading day after the company said its latest share buy-back programme will start next week.
Dangote Cement said it has hired stockbrokers to buy back up to 168.7 million shares, or 1% of its entire current issued shares.
The buy-back will begin on July 17 and end the next day.
On Monday, the company’s stock closed at N330.1 at the Lagos exchange with 5.1 million sold. It was the company’s highest price in the last year.
The day’s gains lifted the top cement maker’s market value by around N506 billion to N5.56 trillion.
– Behind the news
Companies buy back their stocks mainly for three reasons: optimize their capital structure, enhance stock performance, and enhance shareholder wealth.
By repurchasing their own shares from the open market, companies can reduce the number of outstanding shares, effectively concentrating ownership and boosting the earnings per share. This can lead to increased stock prices and shareholder returns.
Share buybacks also allow companies to utilize excess cash and signal confidence in their financial strength and future prospects. Buybacks can be used as a means of returning capital to shareholders without issuing dividends, providing tax advantages for investors.
The latest buyback is Dangote Cement’s third in less than three years.
In 2020, Dangote Cement repurchased 40.2 million shares for N9.8 billion, representing 0.2% of the total issued shares.
In the second tranche last January, it bought back over 126.7 million units or 0.7% at N35.1 billion, leaving the firm’s fully paid outstanding shares at about 16.9 billion units.
– Conoil too
Separately, oil company Conoil shares also rose 9.97% on Monday by nearly the maximum allowed 10% for daily trading.
Its stock closed at N112.5, the highest in 52 weeks.
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