Nigeria’s Dangote Cement to start share buy back on Dec 30
By Samuel Bankole
Dangote Cement, which accounts for the fifth of the Nigerian Stock Exchange (NSE) market capitalistaion has announced its plans to commence a buyback of the company’s shares on December 30 to boost shareholder value.
The company, majorly owned by Africa’s richest man, Aliko Dangote will buy back as much as 10 percent of the issued capital starting with a first tranche of 85.2 million shares of 50 kobo each, or 0.5 percent of the total in issue, Dangote Cement said in a regulatory filing with the NSE on Monday.
The purchase will be done in the open market on Dec. 30 and ends the following day or when the entire target number of shares are repurchased, whichever is earlier, it said.
Dangote Cement 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.
It 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.
“Dangote Cement Plc (“Dangote Cement” or “DCP” or the “Company”) hereby announces the commencement of its share buy-back programme (the “Share BuyBack Programme” or the “Programme”).
“The Share Buy-Back Programme will be executed under the approval granted by the Company’s shareholders at the Extraordinary General Meeting of DCP which held on 21 January, 2020, within the framework provided under Rule 398 (3)(xiv) of the Securities and Exchange Commission’s (“SEC”) Rules and Regulations (as applicable) and in accordance with Rule 13.18 of the Rulebook of the Nigerian Stock Exchange (“The NSE”).
“Based on the aforementioned shareholders’ approval, the number of shares to be repurchased under the Share Buy-Back Programme will not exceed 10% of DCP’s issued capital.
“The Programme will be effected in tranches, with Tranche I being executed by the appointed stockbrokers on the Company’s behalf,” the company said in the regulatory communication.
The continent biggest cement firm currently have a total of 17,040,507,404 fully paid up ordinary shares of 50 Kobo each.
“The shares being bought back by the Company under the Share Buy-Back Programme will be held as treasury shares, and may subsequently be cancelled. Execution of this Tranche I is not expected to have any material impact on the Company’s financial position.
“Dangote Cement shareholders seeking to participate in Tranche I of the Share BuyBack Programme are hereby advised to contact their stockbrokers or any other independent professional adviser registered as a capital market operator by the SEC for further guidance on submission of trades on The NSE’s trading platform.
The buyback “reflects that the management believes in the valuation and prospects of the company,” Abiodun Keripe, head of research at Lagos-based Afrinvest West Africa, said by phone.
“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,” he said.
Dangote shares rose 9.9 percent to N230.40 per share as of 12:20p.m. in Lagos, its biggest advance in five months, on the news of the buyback.
A buyback “should portend something positive for investors as the price begins to climb higher,” Keripe said. “The downside is that it will further create scarcity of