Shanghai-based Chinese steelmaker Baoshan Iron and Steel Co. Ltd (Baosteel) has announced that as of February 4 it has spent RMB 1.97 billion ($314 million), including commissions, to buy back 424 million of its own shares, paying between RMB 4.51 and RMB 5 per share. The volume of shares purchased is equivalent to 2.4 percent of Baosteel’s total shares.
After Baosteel announced its share buyback program on August 28, 2012, its shares closed at RMB 4.48 for per share. However, as of February 5, the price of its shares was up 15.18 percent compared to August 28, closing at RMB 5.16 per share, exceeding the upper price limit for the buyback program,i.e., RMB 5 for per share. Accordingly, Baosteel’s share purchases may be constrained by the increase of its share price.
In August last year, Baosteel stated its intention to repurchase one billion of its own shares, or 5.7 percent of its total equity. As of February 4, Baosteel has completed over 40 percent of its planned share purchases.