COMPANY COMMENT: Buy-back may affect M&R control dynamics
Share buy-back, equivalent to about 4% of its market capitalisation, could have a significant effect on the control structure
The equity market generally enjoys share buy-backs, seeing this sort of contrivance as a way for management to more effectively manage the capital base of a company. It tends to lead to some uncertainty and invariably adds to the volatility of the share price, which is always good for market players. By contrast, academics are frequently opposed to share repurchases — one went as far as describing them as tantamount to a partial liquidation because they result in the company being smaller. In the case of Murray & Roberts (M&R), which has just announced a R250m repurchase programme, investors initially seemed concerned. On Friday, the share price dipped 2% to close at just above R13, but on Monday, it recovered to more than R13.60. The traditional short-term response to news of a repurchase programme tends to be an uptick in the share price, which is unsurprising given the prospect of a reasonably aggressive buyer propping up the share price. One of the reasons academics oppose them ...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.