Tropical fruit distributor Fyffes has bought back 17m of its own shares – around 5 per cent of the total shareholding in the group – in an effort to take advantage of what it describes as an 'undervalued' share price.
The ordinary shares of €0.06 each in the company's issued share capital were purchased yesterday at a market price of €0.31 per share, the group revealed in an announcement to the Irish Stock Exchange this morning.
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.
The 17,000,000 ordinary shares purchased under this transaction will be held as treasury shares.
In addition, Fyffes has authorised the cancellation of 3,946,610 ordinary shares previously held as treasury shares by the company.
Following this transaction, Fyffes plc has 328,566,633 ordinary shares in issue, excluding the 32,075,000 now held as treasury shares.
Fyffes' company secretary Seamus Keenan told Eurofruit the company had been encouraged to buy back shares following consultation with its shareholders and independent stockbrokers.
'Clearly we feel that our share price is undervalued,' he commented. 'Our view is that the share price as it stands represents good value at this level, where it's been stuck for most of this year.'
Mr Keenan added that Fyffes regarded tough conditions in the continental European banana market during 2010 as 'a one-year blip'.
He added: 'We believe there is the potential for there to be an upturn in the share price.'
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