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Mercedes-Benz to buy back up to 4 billion euros in shares by 2025
Global Banking & Finance Review®
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BERLIN (Reuters) -Mercedes Benz said on Thursday it plans to buy back up to 4 billion euros ($4.28 billion) of its shares over two years from March 2023, in a move welcomed by analysts ahead of the carmaker reporting full-year earnings on Friday.
BERLIN (Reuters) -Mercedes Benz said on Thursday it plans to buy back up to 4 billion euros ($4.28 billion) of its shares over two years from March 2023, in a move welcomed by analysts ahead of the carmaker reporting full-year earnings on Friday.
Shareholders Beijing Automotive Group and Geely had agreed to divest their shares on a pro-rata basis concurrently with the share buyback to keep their stakes in the company below 10%, the statement added.
The two Chinese companies are the largest single shareholders in Mercedes-Benz, together holding nearly 20% of the carmaker.
Under German financial regulation, shareholdings beyond a 10% threshold must be disclosed to regulators for scrutiny.
Analysts expected the company to announce a share buy back programme to coincide with the publication of Friday’s fourth-quarter report given the company’s high liquidity in automotive – estimated by BofA Global Research to be over 25 billion euros for 2022 – and strong free cash flow.
“We see this as a positive step showcasing an improved capital allocation strategy,” Daniel Roeska of Bernstein Research said in a note.
($1 = 0.9354 euros)
(Reporting by Riham Alkousaa, Victoria Waldersee; Editing by Susan Fenton and Alistair Bell)
A share buyback occurs when a company purchases its own shares from the marketplace, reducing the number of outstanding shares. This can increase the value of remaining shares and is often seen as a way to return capital to shareholders.
Equity refers to the ownership interest in a company, represented by shares of stock. It signifies the amount of ownership a shareholder has in the company, which can appreciate in value based on the company's performance.
Liquidity refers to how easily an asset can be converted into cash without affecting its market price. In finance, high liquidity indicates that assets can be quickly sold, while low liquidity means it may take longer to sell assets.
Free cash flow is the cash generated by a company after accounting for capital expenditures. It represents the cash available for distribution among all the securities holders of a corporate entity, including equity and debt holders.
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