Dangote Cement Plc will now advance to the second phase of buying up to 10 per cent of its outstanding shares back from the public, hoping the move will help create a lower supply of its common stock, needed to drive up share price and improve valuation.
Nigeria’s largest company by market value has shareholders’ leave from its recently held annual general meeting to purchase more of its 17.04 billion shares from the open market at a size, timeframe and under terms yet to be decided.
It also requires the go-ahead of the Securities and Exchange Commission, the capital market watchdog, to further the transaction.
“With the stabilization of the stock market and improvement in economic conditions, the board of directors consequently decided that it is in the best interest of the company to undertake further tranches of the programme,” the cement maker’s note to the Nigerian Exchange Limited on Thursday said.
Dangote Cement stated plans to undertake the share buyback in January 2020 but the coronavirus outbreak stood in its way.
Nothing came of the move until December when it managed to mop up just 0.24 per cent or 40.200 million units of the 0.50 per cent proposed for the first stage, costing N9.77 billion.
Dangote Cement accounts for at least three of every five bags in the Nigerian market and wants to scale up production infrastructures by one-third before the year winds down.
“We are expanding capacity from about 50,000 tons a day at the beginning of the year to 70,000 tons a day at the end of the year,” Edwin Devakumar, the group executive director of Dangote Industries Limited told Bloomberg last month.
The company upped its cash and cash equivalents by 1.4 per cent to N147.871 billion, freeing up more fund to execute the buyback.
Shares in Dangote Cement were down by 2.86 per cent in Lagos on Thursday, closing at N210 per unit.
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