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By Chinwendu Obienyi
Shares of Dangote Cement Plc, yesterday, gained 10 per cent in the first one hour of trading on the floor of the Nigerian Stock Exchange (NSE) largely on the back of news of the company’s share buyback plans.
This was even as the NSE All Share Index and market capitalisation rose by 1.72 per cent and N334 billion to close Monday’s session at 37,443.40 points and N19.570 trillion respectively.
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A share buyback is a corporate action where a company buys its own shares in the open market at the prevailing market price. It’s a kind of corporate financial management that enables a company have more free cash flow, which it does not want to pay out as dividends, or does not have a more profitable avenue to invest in but decides to use the cash flow to buy back its own shares.
The cement company had announced the commencement of its share buy-back programme, under the approval granted by the Company’s shareholders at the Extraordinary General Meeting of DCP, held on 21 January 2020. This announcement was made in a notification issued yesterday morning, December 21, before the commencement of stock trading.
Daily Sun investigations on Monday confirmed bids for about 5.5 million shares which had been tabled without a single offer on the table. Just like it is with demand and supply of any product, whenever a stock has more bids compared to offers (net bid) the share price is more than likely to appreciate.
