Max’s Group Inc. on Friday said it is going for a share- buy-back program covering P350 million worth of stocks after its board of directors approved the move.
The program is supposed to benefit shareholders in the long run in view of the low share prices on the Philippine Stock Exchange (PSE).
Max’s shares have declined by P17.66 or 54.8 percent apiece since it closed at P14.54 per share on Wednesday from P32.20 on January 30, 2015.
In a disclosure to the PSE, the casual dining company said the program would run for two years.
The amount is equivalent to 2.2 percent of the group’s total outstanding shares based on the closing price of P14.54 per share on February 3.
The program, which commenced on February 4, and will run until February 3, 2018, “… is in line with the corporation’s cash management activities seen to benefit shareholders in the long-term.”
Stock prices have been on the wane in markets across the globe, prompted by an increase in yield rates in the US, a slowing global economy and a breakdown in oil prices. The situation has prompted companies listed on the PSE to buy back their own shares.
As a corporate measure, a share buy-back program allows a company to reduce the number of shares in the market. Such a move tends to improve the value of shares on the heels of supply and demand.
By buying back its own shares, a company is able to minimize the likelihood of any shareholder accumulating a controlling stake by taking advantage of low prices. It also siphons off odd lots in the hands of market players.
Companies are taking advantage of low prices, said Astro Del Castillo, president and managing director of First Grade Finance Inc.
“It’s a good investment as well, given the prospects that it may reap in the future,” he said in an earlier interview.
Last month, Max’s entered into a development agreement with China’s ZhongFa Group to open at least 15 Yellow Cab Pizza stores in the world’s second largest economy, over the next five years.
This is the sixth deal the group announced since last year when it started a series of deals to export its acquired restaurant brands, including Pancake House.
The group posted a P313.1-million income in the first nine months of 2015, a turn-around from the pro-forma loss of P31.36 million a year earlier and reflected the merged operations of Max’s brands and the Pancake House Group.