Following Thursday morning’s news that the $34.8 billion leveraged buyout of BCE (TSX: T.BCE, Stock Forum) would not be proceeding, the Montreal-based company announced a common share buyback program Friday.
BCE says it will return capital to shareholders in the form of a normal course issuer bid, repurchasing up to approximately 5% of outstanding common shares, or about 40 million common shares.
"A share buyback is the most efficient method of distributing capital to our shareholders, particularly given the current valuation metrics of the Company," said Siim Vanaselja, chief financial officer of BCE. "The share buyback will be accretive to earnings per share and cash flow. Our improving operational progress provides the Company with confidence in our ability to return value to shareholders now and into the future."
The company also reinstated its common share dividend and noted that shareholders of record as of December 23 will receive a quarterly dividend per share of 36.5 cents on January 15.
As a result of the collapse of the privatization transaction, holders of BCE shares will maintain their status as BCE shareholders, says the company.
Starting last summer, BCE began several operational initiatives, including an organizational restructuring that reduced the number of management positions by 15%. The company says its cost reduction initiatives will result in savings of approximately $400 million.
BCE says it will “continue its move forward as a re-energized company with a clear goal - to be recognized by customers as Canada's leading communications company - and the customer-focused strategy and structure required to achieve it.”
On the company’s Bullboard Friday, gwplant said:
Well I for one am very happy to sit back and own a great Canadian company for the long term and collect my .12 per month div and have a sure buyer of the stock up to 40M shares. Buying back the shares is a great idea as opposed to a special dividend because it keeps all the hedges and in and out daytrader and short term investors on the sidelines instead of being able to jump in and out and collect the dividend that was intended for investors of "the company". We truly own a Canadian icon here and glad to see the dividend re instated and capital going back to us shareholders in the form of buyback of shares. All you "catalyst" and "short term" overnight buck wannabes can now move on true investors are stepping up to invest in a great Canadian company[sic].
