GlaxoSmithKline Pharmaceuticals, the largest multinational pharmaceutical company in the country, today announced its open market buy back of equity shares at a price not exceeding Rs 800 per share. The company will witness a fund outflow of Rs 230.65 crore on financing this share buyback programme. |
The Glaxo share closed at Rs 770.45 (cum dividend) today on the Bombay Stock Exchange and at Rs 770.10 on the National Stock Exchange, with 320,585 shares changing hands. At the proposed buyback price of up to Rs 800, the company will be able to buy 2.88 million shares, which represents 3.3 per cent of the company's equity capital. |
However, at the current market price of Rs 770, the company will be able to buy 2.99 million shares or 3.43 per cent of the equity capital of the company. |
If the company succeeds in buying back these shares, its parent-GlaxoSmithKline Plc's stake in the company will increase to 50.83 per cent from the current level of 49.15 per cent. |
The company's UK-based parent company will, however, not participate in the buyback programme. S Kalyanasundaram, managing director of GlaxoSmithKline Pharmaceuticals, said in a release, "The buyback of shares will enhance earnings and improve shareholder value. The operating performance of the company has significantly improved since 2001." |
The enhanced performance, together with income from the sale of properties, has resulted in substantial cash generation and a favourable liquidity position as on date." The buyback decision was taken at a board meeting held today. |
The open market buyback price of up to Rs 800 is likely to stabilise the Glaxo share price, Shailesh Matani, a BSE broker, said. |