Nation Media Group (NMG) yesterday kicked off the process of buying up to 10 percent of its issued shares in Kenya’s first-ever public stock buyback programme, offering investors a chance to cash out.
The media house started buying the shares through the Nairobi Securities Exchange (NSE) at Sh25 a piece following shareholder nod at the Annual General Meeting on Friday.
“Through this buyback, we believe shareholders will realise value and cash in at a reasonable price,” NMG board chairman Wilfred Kiboro said yesterday at the launch of the buyback programme.
“Last year was a difficult year and NMG share price went down from about Sh40 at close of 2019 to Sh16 at the end of 2020. There was a lot of volatility and the few shareholders who wanted to sell were not getting value for their investments,” Mr Kiboro said.
NMG is the first company at the NSE to launch a share buyback following changes to the Companies Act in 2015 that allowed firms to acquire their own shares.
The offer will close on September 24 or earlier if the company acquires 20,739,652 shares ahead of the deadline.
NMG share has been performing well at the Nairobi bourse since the announcement of the buyback programme, gaining 44 percent over the last one month to close trading at Sh25 a piece yesterday.
Mr Kiboro said the stock acquired through the share buyback will be held as treasury shares, adding that they could be used later for share swaps, mergers and acquisitions.
“The shares we buyback could help us in the future in mergers and acquisitions or share swaps. We will be keeping them as treasury and they will not attract dividends so more value will accrue to the remaining shareholders,” Mr Kiboro said.
The media house recorded a net profit of Sh135.5 million for the year ended December 2020 following a strong recovery in the second half of the year that wiped out the loss of Sh352.7 million announced at half-year.
The company had Sh2.9 billion in cash and cash equivalents at the close of the year.
Mr Kiboro said NMG share price at the NSE has been undervalued and has not reflected the media house’s performance and long term strategy.
East Africa’s largest media company has rolled out a two-pronged approach to sustain growth that includes renewed digital presence with the launch of Nation.Africa and a revamp of its print business with the recent facelift of the Daily Nation.
“We are going to go back to investor briefings to engage shareholders to explain the business model and strategy for the next four to five years so they make informed decisions,” he said.