Reasons for Dangote Cement buying back shares are to increase long term shareholder value. Considering the review of the company’s share price and prevailing equity market conditions, the board of Dangote Cement believed that at the current market valuation values, the initiative is considered as one of the appropriate capital allocation decisions to improve long term shareholder value.
The company will continue to monitor the evolving business environment and market conditions in making decisions on further tranches of the Share Buy-Back Programme. National coordinator of the Independent Shareholders Association, Sir Sunny Nwosu said Nigerian shareholders will forever appreciate the share buyback plan of the company especially at this time of the year.
“A company can use share buyback to consolidate its equity. This is a way of reducing the numbers of shareholders and thereby reduces the burden of dividend and bonus shares among others.” Omordion said that the proposed share buyback was an indicator that Dangote Cement was trading below the fair value, saying that the shares buyback would later be cancelled, and that would enhance value of Dangote Cement shares in the market, saying “The cancellation of the shares will enhance earnings per share and better dividend. My take, for a long term buy Dangote Cement and at least hold for two or more years.
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