Fonterra Announces Share Buyback – Food & Drink Business

Fonterra Co-operative Group said it would allocate up to NZ$50 million (A$45 million) for a share buyback program, saying its shares are currently undervalued.

Fonterra will buy shares at market price and the buyback could last up to 12 months.

Fonterra Chairman Peter McBride said: “The co-op believes that the prevailing price, particularly since the end of April, has undervalued Fonterra shares, which is one of the main reasons for announcing this takeover. .”

McBride said he was aware of concerns about Fonterra’s declining share price. Fonterra’s shareholder market liquidity had been low since the start of a capital structure review in December last year, which includes a new flexible shareholding structure. Its share price has fallen 19% since the start of the year.

He said one of the factors affecting liquidity was that share price compliance obligations were suspended last year. He reminded shareholders that even if the bonds were suspended, farmers could still buy or sell shares within the shareholding requirements, which are 1 to 2 times their average milk supply over three seasons.

Although the co-op said it had no actual start date, it was preparing to implement the flexible structure as soon as possible.

McBride added that the board had decided that the new structure will go into effect, suppliers who choose to acquire their minimum stake under the new six-season entry deadline will not be required to supply the cooperative. for six seasons once they acquire their 33 by holding a penny.

The company will cancel any shares it buys back, thereby reducing the number of shares outstanding and hopefully increasing its value.

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