Dangote Cement to Try Share Buyback Option Amid Low Valuation

By Dipo Olowookere

The board of Dangote Cement Plc has announced its intention to consider the option of buying back shares of the company from the stock market as the cement firm continue to endure the devaluation of the securities.

Business Post reports that shares of Dangote Cement, which traded at the stock exchange as high as N273 per unit as at the close of transactions on January 17, 2018, managed to close at N149.40 per share on October 31, 2019, indicating a decline of 45.3 percent.

When its present share price is compared with the same period of last year, its has lost about 30 percent of its value and has declined year-to-date by 19.7 percent.

On the first trading session of 2019, the share value of Dangote Cement was N186 per unit and on December 31, 2018, the last trading day of last year, it was N189.70 each. On the first trading day of 2018, which was January 2, share price of the cement company with a huge market share in Nigeria was N223 per unit.

Ostensibly worried at the gradual loss of value of the company’s share at the stock market, the board of Dangote Cement is planning a share buyback programme to salvage the situation.

Business Post reports that share buyback is one of the options used by companies when their shares are undervalued at the market. When these stocks are bought from shareholders, they can then be reissued at a higher value when investors are jostling to have them because of improved market conditions and growth prospects.

“Today, the board of directors of Dangote Cement announces that it has considered and subject to obtaining detailed advice and regulatory approvals, will recommend to its shareholders for consideration, a proposal to consolidate its share capital, as well as a share buyback programme. The details of these actions are yet to be finalised and will be communicated at a later date.

“Shareholders and potential investors are advised to exercise caution when dealing in the company’s shares until a further announcement is made,” the statement said.