Reece Group shares rocket on $250m buyback
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More news: Shares in Reece Group jumped in morning trade after the plumbing supplier announced a $250 million share buyback.
Reece shares were up 12.5% to $11.61 at 11am AEST. The stock is up 60% over the last 12 months.
Reece announces $250m off-market buyback
The news: Plumbing supplier Reece Group has announced an off-market share buyback, to return shareholder value amid a “strong balance sheet with excess capacity”, according to chair and CEO Peter Wilson.
The numbers: Reece is targeting a share buy-back of $250 million, but maintains flexibility to expand the buyback to an upper limit of $400 million.
Eligible shareholders can offer to sell shares to Reece at a price floor of $11, which is a 6.6% premium on the last close price or up to a ceiling of $13, which is a 26% premium, in 20 cent intervals.
The context: The buyback ex-entitlement date will be 25 September, with the buy-back period to run between 29 September and 20 October.
Reece shares faced a significant decline in August after its full-year result included a 24% drop in net profit. CEO Peter Wilson at the time described it as a “turbulent year” for the company.
What they said: In a letter to the shareholders, the Reece board said it believes the buyback “is an efficient way to return excess capital to shareholders while maintaining a conservative leverage ratio”.
“It also ensures there is flexibility to fund future growth — both organic and inorganic — as outlined in Reece’s capital management priorities.”
