9/19/11 - AZ Buys Almost a Million of its Own Shares, Then Cancels Them

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Anonymous

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LONDON (Dow Jones)--AstraZeneca PLC (AZN.LN), a global research-based biopharmaceutical company, said Monday that on Sept. 16, it purchased for cancellation 750,000 ordinary shares of AstraZeneca PLC at a price of 2826 pence per share.

MAIN FACTS:

-Upon the cancellation of these shares, the number of shares in issue will be 1,336,347,845.

-Shares at 0830 GMT down 41 pence, or 1.5%, at 281 pence, valuing the company at GBP37.54 billion.

http://online.wsj.com/article/BT-CO-20110919-702092.html?mod=WSJ_qtoverview_wsjlatest
 




Supply and demand, you see. They'd like to see the stock price higher, and with all the cash on hand, why not? If they need it they'll just reissue more shares, and based on the business acumen of the people running things, it'll likely be when the price is much lower.
 




Anonymous said:
LONDON (Dow Jones)--AstraZeneca PLC (AZN.LN), a global research-based biopharmaceutical company, said Monday that on Sept. 16, it purchased for cancellation 750,000 ordinary shares of AstraZeneca PLC at a price of 2826 pence per share.

MAIN FACTS:

-Upon the cancellation of these shares, the number of shares in issue will be 1,336,347,845.

-Shares at 0830 GMT down 41 pence, or 1.5%, at 281 pence, valuing the company at GBP37.54 billion.

http://online.wsj.com/article/BT-CO-20110919-702092.html?mod=WSJ_qtoverview_wsjlatest
Click to expand...

This is done almost each and every day until $4 billion in shares have been bought and retired. Old news. Been going on for a long time.
 












Did you ever learn anything about economics? Amazing!

The company buys shares... propping up its share price.... good for company

company cancels the shares..... it goes from whatever 2 billion outstanding shares to 1.9 billion... good for company

less shares = more value per shareholder

this is good for everyone owning stock, if the price goes down again well that just sucks but their efforts of eliminating cash on hand and buying shares is viewed positively by the investors.

it'd be nice to get some for bonus but they really could give a damn about helping out those on the street trying to sell these medicines
 




Anonymous said:
Did you ever learn anything about economics? Amazing!

The company buys shares... propping up its share price.... good for company

company cancels the shares..... it goes from whatever 2 billion outstanding shares to 1.9 billion... good for company

less shares = more value per shareholder

this is good for everyone owning stock, if the price goes down again well that just sucks but their efforts of eliminating cash on hand and buying shares is viewed positively by the investors.

it'd be nice to get some for bonus but they really could give a damn about helping out those on the street trying to sell these medicines
Click to expand...

Money has value (you pay money (interest) to get access to it), if the company cannot allocate the money resources profitably, then it should return it to the shareholders (who own it). In a roundabout way that's what management has done. Far far better would have been to either 1) pay a special dividend, or 2) use the cash to increase shareholder value through business activities.

AZ management has done the repurchase and cancellation because it either cannot find a better use for the cash, or it wants to prop up the stock price, or both. If it knew what it was doing in the pharma business, you'd think they could get a better return on equity that they got by the cancellation of outstanding shares. I think they did it because they want to keep control of the funds (all they have to do is reissue shares, the charter has allowed for the issuance of a certain amount of shares), prop up the share price all they can, and shut up the shareholders who want the cash in the form of a dividend if the company can't better allocate their (the shareholders') money.

The scheme will backfire because the company purchased overvalued shares and it will lose money big time on the transaction, unless they come up with a new product, quickly.
 




Anonymous said:
Did you ever learn anything about economics? Amazing!

The company buys shares... propping up its share price.... good for company

company cancels the shares..... it goes from whatever 2 billion outstanding shares to 1.9 billion... good for company

less shares = more value per shareholder

this is good for everyone owning stock, if the price goes down again well that just sucks but their efforts of eliminating cash on hand and buying shares is viewed positively by the investors.

it'd be nice to get some for bonus but they really could give a damn about helping out those on the street trying to sell these medicines
Click to expand...

Ever hear of an IPO? Companies with growth prospects issue them. Canceling shares is the reverse of an IPO.
 




On September 16, AZN was trading at around 45. Now it's around 43. So the loss right now on the transaction is roughly $2.00 X 750,000, or 1.5 million US dollars.

If they'd have waited they would have captured that value, but they didn't. This is shareholder money they are managing. Poorly.
 




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