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Is This India’s Largest Share Buy Back By Reliance?

Reliance Industries, India’s biggest company by market value, is probably trying to cover-up its low performing shares by buying back shares at a maximum price of RS.870 each, about 10% premium over its current share price. Reliance will buy back up to 120 million shares, or 3.7% of outstanding equity.

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Citigroup and Bank of America-Merrill Lynch are declared to be the managers for this buyback offer. Reliance Industries recently said in an advertisement in the newspaper, Times of India that it would open its share buyback from February 1st 2012, and close the offer by January 19th 2013.

Strangely company’s controlling shareholders, which own 44.7% of the equity, are not going to participate in the offer. Shares fell 2.7% on Monday but by Tuesday 11:23 P.M., the stock was up 1.8% at RS.785.45. This share buyback policy is expected to increase the shareholder value and earnings per share by decreasing the number of shares.

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