CGI renews its Normal Course Issuer Bid
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Insights
CGI's announcement of the renewal of its Normal Course Issuer Bid (NCIB) represents a strategic move aimed at managing the company's capital structure. By repurchasing up to 10% of its public float, CGI is signaling confidence in its intrinsic value and financial stability. This action may potentially bolster the stock price by reducing the number of shares available in the market, which could increase earnings per share (EPS) and return on equity (ROE), as the profit margin is now spread over a reduced number of shares.
Furthermore, the fact that CGI has already repurchased a significant number of shares at a weighted average price of $127.71 indicates active management of its equity and a commitment to delivering shareholder value. However, investors should be aware that such buybacks could also signal a lack of profitable investment opportunities within the company, which may be a point of concern for long-term growth prospects.
The NCIB initiative by CGI can be viewed as a market sentiment indicator. Historically, share repurchase programs are often perceived positively by the market, as they can imply that the company's leadership believes the stock is undervalued. The impact on the stock's liquidity should also be considered, as the reduction in the number of outstanding shares could lead to higher volatility. It's essential to monitor the trading volume post-NCIB to understand the full market implications.
Additionally, the implementation of an automatic share purchase plan to facilitate buybacks during blackout periods demonstrates CGI's commitment to the NCIB and provides a systematic approach to capital return. This could provide a steady support to the market price during times when insider trading is prohibited, thus potentially reducing market uncertainty.
CGI's NCIB is subject to regulatory approval by the Toronto Stock Exchange, ensuring compliance with market rules. The company's adherence to the 25% of the Average Daily Trading Volume (ADTV) limit for daily repurchases is a regulatory requirement designed to prevent market manipulation. Also, the ability to buy back shares outside of TSX facilities through exemption orders indicates a flexible approach to capitalize on potential price discrepancies, though this must be done within the legal frameworks set by securities regulators.
Investors should note that such exemption orders typically come with conditions to protect market fairness and transparency. CGI's compliance with these regulations will be critical to avoid legal repercussions and maintain investor trust.
Stock Market Symbols
GIB.A (TSX)
GIB (NYSE)
cgi.com/newsroom
CGI's management and Board of Directors believe that the purchase for cancellation of the Company's Class A subordinate voting shares ("Class A Shares") is a proper use of funds, and the NCIB will provide the flexibility to purchase Class A Shares from time to time as the Company considers it advisable, as part of its efforts to increase shareholder value.
At the close of business on January 23, 2024, there were 206,327,788 Class A Shares outstanding, of which approximately
Under the terms of the NCIB, subject to TSX approval, the Company may purchase for cancellation on the open market through the facilities of the TSX and the New York Stock Exchange (the "NYSE") and through alternative trading systems in
Repurchases of Class A Shares under the renewed NCIB may commence on February 6, 2024 and will end on the earlier of February 5, 2025 or the date on which the Company has either acquired the maximum number of Class A Shares allowable under the NCIB or otherwise decided not to make any further purchases for cancellation under it.
Under its current NCIB that commenced on February 6, 2023 and will end on February 5, 2024, the Company received the approval of the TSX to purchase for cancellation up to 18,769,394 Class A Shares. As at January 23, 2024, CGI has repurchased 7,077,246 Class A Shares by means of open market transactions, through the facilities of the TSX, NYSE and through alternative trading systems in
CGI has implemented an automatic share purchase plan with its designated broker in connection with the NCIB in order to allow, if deemed advisable by the Company, for share purchases for cancellation during self-imposed blackout periods.
About CGI
Founded in 1976, CGI is among the largest independent IT and business consulting services firms in the world. With 90,500 consultants and professionals across the globe, CGI delivers an end-to-end portfolio of capabilities, from strategic IT and business consulting to systems integration, managed IT and business process services and intellectual property solutions. CGI works with clients through a local relationship model complemented by a global delivery network that helps clients digitally transform their organizations and accelerate results. CGI Fiscal 2023 reported revenue is
Forward-looking information and statements
This press release contains "forward-looking information" within the meaning of Canadian securities laws and "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and other applicable
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SOURCE CGI Inc.
FAQ
What is the Normal Course Issuer Bid (NCIB) announced by CGI?
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How many Class A Shares has CGI repurchased under its current NCIB?
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