FMCG company Emami has approved a buyback of equity shares at its board meeting held on Friday.
The company will buyback up to 41.3 lakh equity shares or 0.94 percent of the existing paid up equity capital of the company via the open market route. Total consideration for the buyback would be Rs 186 crore.
An open market buyback is where the company actively buys shares from sellers on the exchanges. Unlike a tender offer, it is not of a fixed duration and an even last for a few months.
The maximum buyback price has been fixed at Rs 450 per share. However, it is not compulsory for the company to buyback shares at that price since it is an open market buyback.
At least 75 percent of the amount earmarked or Rs 139.5 crore will be utilised as the maximum buyback size. Based on this, the company would buyback at least 31 lakh shares. 40 percent of that sum, or Rs 74.4 crore, would be utilised within the initial half of the six months of the buyback opening.
The board has also constituted a buyback committee who will oversee the process. Post the buyback of shares, the promoter's share in the company will go up to 54.78 percent from the current 54.27 percent. The actual shareholding pattern post buyback may vary depending upon the actual number of equity Shares bought back under the buyback.
Companies usually go for the share buyback either to improve their valuations and earning per share (EPS) or reward shareholders. The company in February had paid a second interim dividend of Rs 4 per share to shareholders following a similar interim dividend of Rs 4 in November last year.
Shares of Emami are trading 0.7 percent lower at Rs 361.40.
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