"Buy Back" program

[didds]

I've sen an announcement that a company that I hold shares in is to hold a "bug-back program".
I take it this means that they just buy-back the shares I won so I get cash and they get shares - price based presumably on the market value on the day they formally declare it or somesuch?

. And that this is 100% mandatory and I have no choice in the matter?

Merely interested how this works

didds

[Alaric]

I've sen an announcement that a company that I hold shares in is to hold a "bug-back program".

"buy" not "bug" presumably.


Usually it means that they've set aside a sum of money to buy up shares. Whilst it may support the price, it's only of direct benefit to those selling their shares for other reasons.

[Breelander]

I've sen an announcement that a company that I hold shares in is to hold a "bug-back program".
I take it this means that they just buy-back the shares I won so I get cash and they get shares ... this is 100% mandatory and I have no choice in the matter?

They buy back the shares in the market. You don't have to sell yours if you don't want to.

The direct benefit (if it works) is to reduce the number of share thus increasing the price of those remaining. An indirect benefit is that with less shares to divide it between, the next dividend may be higher (or at least, less likely to be cut).

Companies who offer Scrip dividends (new shares in place of a cash dividend) routinely buy back the same number of shares that they issued as Scrip in order not to increase the total number in circulation.

[didds]

I've sen an announcement that a company that I hold shares in is to hold a "bug-back program".

"buy" not "bug" presumably.

Oops! yes indeed.

didds

[didds]

Thanks all.

didds

[Arizona11]

Also helps the earnings per share value as there are less shares in issue. This often helps increase the share price.

[Arizona11]

Also helps the earnings per share value as there are less shares in issue. This often helps increase the share price.

[mike]

Also helps the earnings per share value as there are less shares in issue. This often helps increase the share price.

Also helps the earnings per share value as there are less shares in issue. This often helps increase the share price directors' bonuses as they hit their EPS targets.