Dhanuka Agrotech has filed a draft offer of letter with the Securities and Exchange Board of India (Sebi) for the buyback of 9.4 lakh shares worth R79 crore. The buyback offer is for R850 per share 11% more than its closing price of R850 on Wednesday at the Bombay Stock Exchange (BSE).
The buyback is proposed to be made from all the existing shareholders of the company on a proportionate basis under the tender offer route. According to Bloomberg data the company has cash and equivalents of R49.8 crore as on March 31, 2016. The promoters have 74.99 % shares in the company as on September 2016.
The company has appointed Emkay Global as the manager to the buyback. In CY 2016 firms spend more than R26,853 crore on buybacks, the highest since 2011.
According to Sebi rules a company can buy back shares either from its existing shareholders on a proportionate basis through a tender offer, the open market or odd lot holders.
In the case of a tender offer, the company has to deposit 25% of the consideration in the escrow account if the consideration does not exceed R100 crore.
Companies offer buybacks to enhance their value since the shares bought back are extinguished and the earnings per share (EPS) gets a boost.
