Larsen & Toubro’s shares are set to end ex-dividend tomorrow (Tuesday) on a proposed massive buyback offer. This means that today is the deadline to acquire L&T for investors who want to participate in the first buyback.
L&T’s board of directors has approved the buyback of Rs 33 crore of shares, or 2.4% of its equity, through a tender offer route at a price of up to Rs 3,000 per share, with a maximum consideration of Rs 10,000 crore.
L&T has fixed September 12 as the registration date. Given that the stock price is currently around Rs 2,900, the buyback response is expected to be muted.
This is the first-ever share buyback by the company, which had attempted a buyback in 2019 but ran into trouble with SEBI.
At that time, the company planned to buy back shares worth Rs 9,000 crore at Rs 1,475 per share, but SEBI directed not to proceed with the buyback. The regulator said that after the buyback (assuming full acceptance) the total amount of secured and unsecured debt owed by the company would be more than twice the company’s paid-in capital and free reserves calculated based on the consolidated financial statements, and that the buyback does not comply with the Companies Act and SEBI norms. This was due to the debt of L&T Finance Holdings, the group’s financial services company.