Stelco Holdings Inc., is bolstering its stock price by offering to buy back almost half of its shares. On Thursday, the company said in a release, the move is a “prudent use” of its financial resources given its assets, including a “substantial level of cash on hand” and the current price of the shares.
The Canadian steel company, based in Hamilton, offered to buy back its shares at $35 per share. That’s a whopping 30 million shares or 47.4 per cent of its outstanding shares, for a maximum purchase of $1.05 billion.
Stelco made the offer after peer companies in the steel industry made public announcements of expecting poor results for the remainder of the fiscal year, which have collectively driven down share prices in the sector, the company said in a news release.
Buying back a substantial amount of stock isn’t a strong move for any company in general, said Peter Warrian, senior research fellow at the Munk School of Global Affairs and Public Policy at the University of Toronto.
