Unilever announced a large share buy back program
Last week Unilever announced a dividend raise of 8%. For more information about this raise, read my post on Dividend increase Unilever 2018. But this wasn’t the only good news for the shareholders.
As a positive surprise, Unilever has also announced plans for a new large share buyback. The share buy back program contains approx. € 6bn worth of shares. This money comes from the sale of its spread division to private equity firm KKR.
Share buy back program
The purpose of the buy back program is to reduce the capital of Unilever PLC (London Stock Exchange) and Unilever N.V (Amsterdam Stock Exchange).And to return the expected after-tax proceeds from the sale of its struggling spreads business last year.
Unilever intends to start the share buy back program in May 2018 and will end before the end of 2018.
This buy back program isalmost 5% of the current market value.
By buying back shares the company is effectively reducing its outstanding shares on the market. And if there are fewer shares outstanding the EPS (Earning Per Share) will be affected by this action. Normally when a company announces a share buyback, investors get excited and the share price will also go up.
I like these kinds of programs. I think they are a good thing for shareholders.
If you want to know more about my opinion on share buy backs, read my Ahold post.
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