HUL board okays share buyback

The board of Hindustan Unilever (HUL) has approved the buyback of shares announced last week at a maximum of Rs 280 apiece. The company’s outgo would not exceed Rs 630 crore.

HUL says the buyback will make the balance sheet leaner. It did a similar buyback in end-July 2007, when the offer was at a 17 per cent premium to the stock price, then at Rs 196. The current offer is at a 20 per cent premium to the average closing price in the last three months.

HUL’s shares closed at Rs 252.50 on the Bombay Stock Exchange today. Since the buyback announcement on June 3, the scrip has been moving up. Anand Shah, senior FMCG analyst at Angel Securities, states: “At the higher end, the company would be able to purchase up to 22.5 million equity shares or one per cent of the equity.”

According to HUL’s consolidated balance sheet dated March 31, cash and bank balances stood at Rs 2,012.38 crore, while networth was at Rs 2,668.93 crore.