Tropical fruit distributor Fyffes has bought back a significant quantity of its own shares for the second time in 12 months, suggesting that the company continues to see its current share price as undervalued.
In a statement to the Irish Stock Exchange, Fyffes' company secretary Seamus Keenan confirmed it had purchased 18m ordinary shares of €0.06 each in the company's issued share capital at a price of €0.39 per share on 7 October.
'The 18m ordinary shares purchased under this transaction will be held as treasury shares,' explained Keenan.
At the same time, Fyffes has authorised the cancellation of 18m ordinary shares previously held as treasury shares by the company.
Following this transaction, Fyffes plc has over 306.6m ordinary shares in issue, excluding almost 33.1m which are held as treasury shares.
The news comes a little over 11 months since Fyffes made a similar purchase of 17m of its own shares – at the time around 5 per cent of the total shareholding in the group – in an effort to take advantage of what it described as an 'undervalued' share price.
Then, ordinary shares of €0.06 each in the company's issued share capital were bought at a market price of €0.31 per share, below this month's valuation.
Speaking to Eurofruit at the time, Keenan said Fyffes regarded tough conditions in the continental European banana market during 2010 as 'a one-year blip', adding that there was the potential for an upturn in the company's share price.
Since then, Fyffes' share price has rallied, moving above €0.39 per share in the second quarter of 2011 before falling bac to below €0.33 this month.
Under rules set out by its shareholders, Fyffes is entitled to buy back a maximum of 10 per cent of shares in the company during a single financial year.
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