Analysts expect EFG Hermes shares to maintain their upward trend in the three upcoming sessions, to reach nearly EGP 12. This comes after the board’s approval of the plan to acquire treasury shares for EGP 1bn at a minimum price of EGP 11.5 per share. The share featured a 10% upward movement during last Thursday’s session, closing at EGP 9.79.
EFG Executive Chairman Karim Awad said: “The objective of acquiring the treasury shares is to maximise the capital returns as well as shareholder profits. Shareholder returns are not limited to dividends, but also through the acquisition of treasury shares. The purchase allows the share to record capital gains, in addition to raising the share’s value.”
Sources suggested EFG intends to execute the first batch in its treasury share acquisition plan before starting the second batch purchases. The first batch has 34,956,522 shares, representing 6.44% of the company’s capital.
The EGP 1bn covers 15.5% of the company’s shares, while the cost of purchasing 10% is EGP 700m. The base is the share price, EGP 11.5, which is determined in the purchase offer. Therefore, making the purchase with EGP 1bn requires keeping the first batch of the treasury shares from exceeding 10%.
EFG Hermes’ board of directors approved last Thursday a plan proposed by the company’s management that aims to distribute EGP 1bn among shareholders within the first nine months of 2014.
This will be implemented through a programme of purchasing treasury shares, to be executed in two stages. The first stage will commence with the authority’s approval and will cost EGP 425m. The second stage will cost EGP 575mn and will be implemented by the end of the second quarter.
Head of Technical Analysis in Al-Tawfik Company for Brokerage Haitham Abd El-Samii said: “EFG’s announcement of purchasing the treasury shares at EGP 11.5 per share will reset its offers for the next three sessions. This will raise the share’s value slightly over the offer price at nearly EGP 12.”