Fonterra will spend up to $50 million buying back its shares over the coming year to support their value.
The dairy co-operative said it planned to acquire as many as 77 million shares, up to 5% of those on issue.
The 12-month on-market buyback is expected to start late August.
Fonterra’s announcement comes after the co-operative undertook a similar $50m buyback last year, saying it believed the shares were undervalued and it was impacting farm balance sheets.
“The primary purpose of the buyback is to be value accretive, and any decision to buy back shares will be considered alongside Fonterra’s other discretionary investment opportunities,” Fonterra chief executive Miles Hurrell said in a statement to the NZX on Thursday.
To help it compete with commercial rivals which don’t require share ownership, it has changed to a more flexible shareholding structure, allowing farmers to hold fewer shares and widening the pool to include sharemilkers, contract milkers and farm lessors as associated shareholders.
Fonterra said it would provide further details on the buyback next month.
The co-operative’s shares last traded at $3.12 and have gained 27% over the past year.
– Stuff
