The Hindu Business Line : DLF fixes buyback price at Rs 600/share maximum

New Delhi, July 10 Real estate company DLF Ltd on Thursday said it would buy back up to 2.2 crore shares at a maximum price of Rs 600 per equity share.

Following the meeting of its board of directors here on Thursday, DLF said it would allocate up to Rs 1,100 crore for the purpose, and would be financing the same through internal resources.

The company would buy the shares through open market purchases via stock exchange route.

“DLF would buy a maximum of 2.2 crore equity shares (about 1.3 per cent equity), which will not reduce the minimum public shareholding below 10 per cent, at a price not exceeding Rs 600 per equity share,” DLF said in a statement adding that the maximum price fixed for the buyback represented a premium of 33.24 per cent over the last average closing price of the company’s equity shares on the BSE and the NSE as of July 9, 2008.

DLF had debuted on the BSE in July 2007 at Rs 582 per share, almost 11 per cent higher than the issue price of Rs 525 per share.

However, the stock value has fallen since the start of 2008, after it opened the year at Rs 1,055 and touched a high of Rs 1,225 (on January 15, 2008), and a low of Rs 350.3 (July 2, 2008).

Shares of the company on Thursday endedup at Rs 458.35, up 1.79 per cent over the previous close on the BSE.

Commenting on the buyback decision, Mr Rajiv Singh, Vice-Chairman, DLF Ltd said, “The company aim has always been to maximise shareholder value and we see the share-buyback decision as a highly attractive opportunity for our shareholders. This decision would be value accretive for the shareholders. While we respect the market, we believe that our current share prices do not reflect the intrinsic strength and future growth potential of DLF.”

“With a clear development pipeline visibility of over ten years, we do not see the need to substantially add to our current land resources given our strong land bank across various cities in India. At present, we would like to concentrate our resources towards effective execution of ongoing projects in the best interest of the company and our shareholders. However, if extraordinary opportunities arise we have ensured that we have sufficient financial resources to take advantage of such situations.”

If DLF buys back the entire 2.2 crore shares as planned, the holding of its promoters, Mr K P Singh and family, would rise to about 89.5 per cent, from 88.2 per cent currently.

When contacted, DLF Chief Financial Officer, Mr Ramesh Sanka said, “The buy-back move would support our shareholders, and even in case they decide to hold on to the shares, the EPS will go up.”

The company has appointed JM Financial Consultants Private Ltd and DSP Merrill Lynch Ltd as the merchant bankers for the buyback.

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