News and information giant Thomson Reuters Corp (NYSE:TRI), parent of Forex ECN FXall and the Thomson Reuters Matching electronic trading platform, is joining the long list of publicly traded companies utilizing share buybacks to put excess cash to use and boost share price.
TRI announced after markets closed on Tuesday that it would buy up to 10 million of its common shares in private deals with third parties. At current share prices that would come to about $370 million in one fell swoop.
The current buyback is part of a previously announced buyback program allowing Thomson Reuters to acquire up to 30 million of its own shares. In May, the company said it planned to buy back up to $1 billion in shares by the end of 2016. This purchase will get them more than one third of the way there.
Thomson Reuters says it will pay a discount to the prevailing share price (on the Toronto Stock Exchange) at purchase time.
TRI shares are trading up 1.8% in after hours US trading. on the news.
With interest rates at such low levels for an extended period of time, corporations are facing some of the same tough questions individual investors are – primarily what to do with cash sitting around. Some companies are using their cash to buy other companies and businesses, growing the M&A route. But there are only so many M&A opportunities out there in many industries, leading companies to look at buying back their own shares as a good use of shareholders’ money. Less shares outstanding means higher EPS and more dividends for each remaining shareholder.
To see TRI’s press release on its share buyback click here.