Brookfield Corporation Announces Renewal of Normal Course Issuer Bid
Brookfield (NYSE: BN, TSX: BN) has received approval from the Toronto Stock Exchange for the renewal of its normal course issuer bid to purchase up to 142,988,844 Class A Voting Shares. This represents 10% of the public float of Brookfield's outstanding Class A Shares. The purchase period extends from May 27, 2024, to May 26, 2025. Brookfield aims to buy shares on the open market through TSX, NYSE, and other trading systems at market prices or other permissible prices. As of May 17, 2024, Brookfield had 1,642,975,156 Class A Shares issued, with 1,429,888,442 shares in the public float. Under the previous bid, Brookfield purchased 27,869,934 shares at an average price of US$37.24. The company believes the market price may not always reflect its full value and sees this buyback as an attractive investment, aiming to cancel or hold the repurchased shares through a non-independent trustee as part of its long-term incentive plans.
- Approval to repurchase up to 10% of public float (142,988,844 shares)
- Repurchase period set from May 27, 2024, to May 26, 2025
- Previous bid resulted in the purchase of 27,869,934 shares at an average price of US$37.24
- Shares repurchased will be canceled or held by a non-independent trustee
- Belief that buyback is an attractive investment opportunity
- Only 27,869,934 shares purchased out of 142,042,619 approved in the previous bid
- Market price of shares might not fully reflect business value, indicating potential undervaluation
- Potential financial commitment to purchase shares may impact other investments
Insights
Brookfield's announcement of a renewed normal course issuer bid (NCIB) signals several things that investors should note. The company is committing up to
From a financial perspective, stock buybacks can improve key financial ratios like earnings per share (EPS) by reducing the number of outstanding shares. This often leads to a short-term increase in stock price. Furthermore, it provides a return to shareholders and demonstrates efficient capital allocation when other investment opportunities are less attractive.
However, there are potential drawbacks. If the company is buying back shares instead of investing in growth opportunities, it could signal limited avenues for profitable expansion. Additionally, share repurchases funded by debt could increase financial leverage, posing risks if market conditions worsen.
Key terms: An NCIB allows a company to buy back its shares from the open market over a specified period, typically viewed as a sign of confidence in the company's stock price. It's important to watch how frequently the company engages in share repurchases and the total financial commitment over time to measure ongoing confidence and financial health.
Brookfield's decision to renew its NCIB can be interpreted as a strategic move to provide liquidity and support its stock price. The market often reacts positively to such announcements, seeing them as a vote of confidence by the company's management. For retail investors, the buyback plan can be seen as a signal that the company perceives its shares as undervalued.
In the broader market context, share repurchase programs have become a common tool for companies to return capital to shareholders, especially when organic growth opportunities are limited or when excess cash reserves exist. The weighted average price of
Investors should monitor how the market reacts to the renewal of the NCIB and Brookfield's stock performance relative to its industry peers. If the repurchase plan successfully supports the stock price, it might indicate strong underlying fundamentals and effective management strategies.
BROOKFIELD, NEWS, May 23, 2024 (GLOBE NEWSWIRE) -- Brookfield Corporation (“Brookfield”) (NYSE: BN, TSX: BN) today announced it has received approval from the Toronto Stock Exchange (“TSX”) for the renewal of its normal course issuer bid to purchase up to 142,988,844 Class A Limited Voting Shares (“Class A Shares”), representing
As at May 17, 2024, the number of Class A Shares issued and outstanding totaled 1,642,975,156 of which 1,429,888,442 shares represented the public float. In accordance with the rules of the TSX, the maximum daily purchase on the TSX under this bid will be 399,711 Class A Shares, which is
Of the 142,042,619 Class A Shares approved for purchase under Brookfield’s prior normal course issuer bid that commenced on May 25, 2023 and will expire on May 24, 2024, Brookfield purchased 27,869,934 Class A Shares as of May 17, 2024; 8,551,236 Class A Shares through open market purchases on the TSX and 19,318,698 Class A Shares through open market purchases on the NYSE. The weighted average price that Brookfield paid per Class A Share acquired under this bid was US
Brookfield is renewing its normal course issuer bid because it believes that, from time to time, the market price of its Class A Shares may not fully reflect the underlying value of its business and its future business prospects. Brookfield believes that, in such circumstances, the outstanding Class A Shares represent an attractive investment for Brookfield, since a portion of its excess cash generated on an annual basis can be invested for an attractive risk adjusted return through the issuer bid. All Class A Shares acquired by Brookfield under this bid will be cancelled and/or purchased by a non-independent trustee pursuant to the terms of Brookfield’s long-term incentive plans.
Brookfield intends to enter into an automatic share purchase plan on or about the week of June 17, 2024 in relation to the normal course issuer bid. The automatic share purchase plan will allow for the purchase of Class A Shares, subject to certain trading parameters, at times when Brookfield ordinarily would not be active in the market due to its own internal trading black-out period, insider trading rules or otherwise. Outside of these periods, Class A Shares will be repurchased in accordance with management’s discretion and in compliance with applicable law.
About Brookfield Corporation
Brookfield Corporation is a leading global investment firm focused on building long-term wealth for institutions and individuals around the world. We have three core businesses: Alternative Asset Management, Wealth Solutions, and our Operating Businesses which are in renewable power, infrastructure, business and industrial services, and real estate.
We have a track record of delivering
Please note that Brookfield Corporation’s previous audited annual and unaudited quarterly reports have been filed on EDGAR and SEDAR+ and can also be found in the investor section of its website at www.brookfield.com. Hard copies of the annual and quarterly reports can be obtained free of charge upon request.
For more information, please visit our website at www.bn.brookfield.com or contact:
| Media: Kerrie McHugh Tel: (212) 618-3469 Email: kerrie.mchugh@brookfield.com | Investor Relations: Linda Northwood Tel: (416) 359-8647 Email: linda.northwood@brookfield.com |
Forward-Looking Statements
This news release contains “forward-looking information” within the meaning of Canadian provincial securities laws and “forward-looking statements” within the meaning of the U.S. Securities Act of 1933, the U.S. Securities Exchange Act of 1934, “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995 and in any applicable Canadian securities regulations (collectively, “forward-looking statements”). Forward-looking statements include statements that are predictive in nature, depend upon or refer to future results, events or conditions, and include, but are not limited to, statements which reflect management’s current estimates, beliefs and assumptions and which are in turn based on our experience and perception of historical trends, current conditions and expected future developments, as well as other factors management believes are appropriate in the circumstances. The estimates, beliefs and assumptions of Brookfield are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and as such, are subject to change. Forward-looking statements are typically identified by words such as “expect”, “anticipate”, “believe”, “foresee”, “could”, “estimate”, “goal”, “intend”, “plan”, “seek”, “strive”, “will”, “may” and “should” and similar expressions. In particular, the forward-looking statements contained in this news release include statements referring to potential future purchases by Brookfield of its Class A Shares pursuant to the company’s normal course issuer bid and automatic share purchase plan.
Although Brookfield believes that such forward-looking statements are based upon reasonable estimates, beliefs and assumptions, actual results may differ materially from the forward-looking statements. Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include, but are not limited to: (i) the impact or unanticipated impact of general economic, political and market factors in the countries in which we do business, including as a result of COVID-19 and related global economic disruptions; (ii) the behavior of financial markets, including fluctuations in interest and foreign exchange rates; (iii) global equity and capital markets and the availability of equity and debt financing and refinancing within these markets; and (iv) factors detailed from time to time in our documents filed with the securities regulators in Canada and the United States.
We caution that the foregoing list of important factors that may affect future results is not exhaustive and other factors could also adversely affect future results. Readers are urged to consider these risks, as well as other uncertainties, factors and assumptions carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements, which are based only on information available to us as of the date of this news release. Except as required by law, Brookfield undertakes no obligation to publicly update or revise any forward-looking statements, whether written or oral, that may be as a result of new information, future events or otherwise.
FAQ
What is Brookfield's normal course issuer bid?
When does Brookfield's new share repurchase program start?
How many shares is Brookfield authorized to repurchase?
What is the duration of Brookfield's repurchase program?
On which exchanges will Brookfield make share purchases?
How many shares did Brookfield buy in its previous repurchase program?
What was the average price paid for the shares in the previous repurchase program?
Why is Brookfield renewing its share repurchase program?
