Tenaris to Commence a USD 300 million Second Tranche of its USD 1.2 Billion Share Buyback Program
Tenaris S.A. announced a non-discretionary buyback agreement with a primary financial institution as part of its Share Buyback Program, covering up to $1.2 billion to cancel acquired ordinary shares. The buyback agreement will run from February 26, 2024, to May 24, 2024, with shares purchased under the Program to be cancelled. The purchases will comply with regulations, including the Market Abuse Regulation 596/2014.
Share buyback programs often signal a company's confidence in its own financial health and future prospects. In the case of Tenaris S.A., the announcement of a $1.2 billion buyback program represents a significant capital allocation decision. By opting to cancel the acquired shares, Tenaris is effectively reducing its shares outstanding, which can lead to an increase in earnings per share (EPS) and potentially enhance shareholder value. The timing of buyback programs can be critical, as they are often executed when management believes the shares are undervalued. The non-discretionary agreement with the financial institution ensures that the buyback is conducted without Tenaris's influence, which is designed to prevent potential market manipulation and adhere to regulatory compliance.
From a financial perspective, the market will often react positively to such news, as it may imply that the company's leadership believes the stock is undervalued. It is also an indication that the company is generating enough cash flow to fund significant share repurchases without compromising its operational capabilities or investment opportunities. However, investors should consider the opportunity cost of such a program, as the capital used for share repurchases could alternatively be used for expansion, debt reduction, or other investments that might also drive long-term growth.
It is essential to understand the broader market implications of Tenaris's share buyback program. The steel pipe manufacturing industry is influenced by global demand for energy, as Tenaris's products are primarily used in the oil and gas sector. With the cyclical nature of these industries, Tenaris's decision to engage in a buyback program could reflect an internal analysis that anticipates stable or increasing demand for its products. Moreover, buybacks can be a tool for adjusting capital structure and improving financial ratios, which may make the company more attractive in the eyes of investors and analysts.
Additionally, the market will monitor the execution of this buyback program closely, as the timing and volume of share repurchases can affect stock price dynamics. If the Bank executing the buyback operates during market downturns or periods of low liquidity, it could provide a floor for the stock price. However, it is also important for investors to scrutinize the long-term effects on the company's balance sheet and whether the buyback aligns with broader strategic initiatives that include investment in innovation and market expansion.
The legal framework surrounding share buybacks is complex and highly regulated to ensure fair market practices. Tenaris's compliance with the Market Abuse Regulation 596/2014 and the Commission Delegated Regulation (EU) 2016/1052 is crucial to maintain the integrity of the financial markets. These regulations are designed to prevent insider trading and market manipulation by stipulating strict rules on how and when a company can repurchase its own shares. The non-discretionary nature of the agreement with the Bank ensures that Tenaris remains at arm's length from the decision-making process related to the timing of the share purchases.
This legal framework provides a safeguard for investors, ensuring that the buyback is conducted in a manner that is both transparent and compliant with the law. The fact that Tenaris can continue to purchase shares during closed periods, as allowed under the Regulations, indicates the robustness of the compliance measures in place. Investors should take comfort in the company's adherence to these regulations, which helps to mitigate legal risk and uphold market confidence.
02/25/2024 - 11:55 AM
LUXEMBOURG, Feb. 25, 2024 (GLOBE NEWSWIRE) -- Tenaris S.A. (NYSE and Mexico: TS and EXM Italy: TEN) (“Tenaris”) announced today that pursuant to its Share Buyback Program (the “Program”) announced on November 1, 2023, covering up to $1.2 billion to be executed in the open market with the intent to cancel the ordinary shares acquired through the Program, Tenaris has entered into a non-discretionary buyback agreement with a primary financial institution (the “Bank”).
The Bank will make its trading decisions concerning the timing of the purchases of Tenaris’s ordinary shares independently of and uninfluenced by Tenaris and will act in compliance with applicable rules and regulations, including the Market Abuse Regulation 596/2014 and the Commission Delegated Regulation (EU) 2016/1052 (the “Regulations”). Under the buyback agreement, purchases of shares may continue during any closed periods of Tenaris in accordance with the Regulations.
This second tranche of the Program shall start on February 26, 2024, and end no later than May 24, 2024. Ordinary shares purchased under the Program will be cancelled in due course.
Any buyback of ordinary shares in relation to this announcement will be carried out under the authority granted by the general meeting of shareholders held on June 2, 2020, up to a maximum of 10% of the Company’s capital, or any renewed or extended authorization to be granted at a future general meeting of the Company.
Some of the statements contained in this press release are “forward-looking statements”. Forward-looking statements are based on management’s current views and assumptions and involve known and unknown risks that could cause actual results, performance or events to differ materially from those expressed or implied by those statements. These risks include but are not limited to risks arising from uncertainties as to future oil and gas prices and their impact on investment programs by oil and gas companies.
Tenaris is a leading global supplier of steel tubes and related services for the world’s energy industry and certain other industrial applications.
Giovanni Sardagna
What is the Share Buyback Program announced by Tenaris S.A.?
Tenaris S.A. announced a Share Buyback Program covering up to $1.2 billion to be executed in the open market with the intent to cancel acquired ordinary shares.
When will the buyback agreement start and end?
The buyback agreement will start on February 26, 2024, and end no later than May 24, 2024.
Under what authority will the ordinary shares be purchased and cancelled?
The ordinary shares will be purchased and cancelled under the authority granted by the general meeting of shareholders held on June 2, 2020, up to a maximum of 10% of the Company’s capital.
What regulations will the purchases of shares comply with?
The purchases of shares will comply with regulations, including the Market Abuse Regulation 596/2014.
