Starting today (29 February) Nissan Motor is buying back up to 300m shares worth JPY400bn (US$3.5bn). The programme ends on 22 December, 2016.
There will be no change in the balance of shareholding with Renault nor impact on the governance of the alliance, the automaker said in a statement.
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President and CEO Carlos Ghosn said: “Return to shareholders is one of Nissan’s key objectives. We took this decision considering our financial status and outlook to continuously generate significant free cash flow.”
Bloomberg noted Nissan Motor’s share price had declined 24% this year. The decision to buy back shares came two months after the automaker failed in its effort to activate voting rights in Renault, maintaining France’s status as having more say in the alliance than Nissan.
After adding capacity in China, Mexico, Brazil and Thailand in the past few years, Nissan doesn’t have pressing investment needs, which frees up cash to buy back shares, Ashvin Chotai, managing director of Intelligence Automotive Asia in London, told Bloomberg.
“The price-to-earnings ratio is very low today and this is clearly a good time for them to reduce the number of shares outstanding,” Chotai said. “I’m encouraged to see it means that the company thinks their shares are undervalued now.”
