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Sacombank, FPT announce buyback plans

FRIday - 11/11/2011 17:51
HA NOI — Sacombank and FPT have become the latest companies to announce plans to buy back shares with the aim of shoring up plunging stock values – and, in Sacombank's case, possibly prevent themselves from becoming a takeover target.

 

HA NOI — Sacombank and FPT have become the latest companies to announce plans to buy back shares with the aim of shoring up plunging stock values – and, in Sacombank's case, possibly prevent themselves from becoming a takeover target.

Sacombank (STB) has registered to buy back 100 million shares worth nearly 10 per cent of its charter capital, while software giant FPT has decided to buy back 1,000 convertible bonds worth VND1 trillion (US$47.6 million). Rumours held that both made the moves to protect themselves from likely takeovers.

However, Sacombank Chairman Dang Van Thanh told Sai Gon Economic Times that the bank had previously decided that if its share price fell below VND20,000, incorrectly reflecting book value, the bank would buy back shares.

He confirmed that Sacombank had sufficient financial capacity to buy up to 10 per cent of its outstanding shares as registered. The buyback would be conducted through both order matching and negotiation methods.

"We are willing to invest in our shares, and this demonstrates the bank's responsibility towards its shareholders," Thanh said.

He denied any possibility of a takeover, noting that no single shareholder possessed more than a 30-per-cent interest in the bank. "The bank hasn't discovered any risk of takeover, but it has nevertheless prepared a strategy to counter such a possibility," he added.

FPT Deputy Director Nguyen The Phuong said his company's action was aimed at optimising its capital so the corporation could focus its investment in its core lines of business and limit financial investments.

"This will also help limit any dilution of shares, creating long-term benefits for shareholders," Phuong said.

FPT has accumulated about VND2.5 trillion ($119 million) in cash-on-hand as of September 31.

Many companies have previously bought back shares at depressed levels only to resell them later at higher prices. In addition to STB and FPT, companies that have registered to repurchase their own shares include BIDV Insurance (BIC), insurer PVI Holdings (PVI) and Viet Nam Ocean Shipping Co (VOS) – all of which have decided to buy back around two million shares.

Market insiders expect the number of companies registering to buy back shares will continue to rise if the stock market has not revived towards the end of this year. — VNS

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