DIVERSIFIED miner Glencore will spend $1bn purchasing its own shares over seven months as the company seeks to counter declining stock prices that have eroded market value, BusinessLive said on Monday.
The mining giant announced Monday that UBS will manage the buyback program, which aims to reduce capital and support share prices. Purchased shares will be held in treasury, Glencore said in a statement.
The initiative follows last week’s completion of the Viterra and Bunge Global SA merger, which provided Glencore with a $900m cash windfall, said BusinessLive. The transaction also left the company holding 32.8 million shares in NYSE-listed Bunge, which Glencore considers surplus capital, it said.
Glencore said the buyback is supported by the value of its new Bunge shareholding, representing less than 40% of those shares’ market value when the merger concluded.
The miner has lost more than R500bn in market capitalization over the past year as investors worry about weakening commodity prices. Coal prices have particularly pressured the company, falling nearly 20% annually due to trade tensions, policy uncertainty and renewable energy investment reducing demand.
In April, Glencore narrowed its full-year coal production guidance, reflecting concerns about seaborne thermal coal price prospects. The company’s coal operations have faced headwinds as global markets shift toward cleaner energy sources.
The share repurchase program represents Glencore’s latest effort to return value to shareholders while managing excess capital from recent asset transactions. The seven-month timeframe suggests the company expects sustained pressure on its stock price.
