Transaction in Own Shares
- None.
- None.
Insights
Shell plc's recent transaction involving the buyback of shares is a strategic financial move that can have several implications for the company's financial health and shareholder value. Share buybacks are typically executed to manage the dilution of shares, especially after periods of employee stock option exercises, or to improve financial ratios such as earnings per share (EPS) by reducing the number of outstanding shares. This can lead to an increase in the stock price due to the perceived increase in value per share and a more efficient capital allocation.
From a financial analysis standpoint, the buyback indicates that Shell may believe its shares are undervalued or that it is an opportune time to return capital to shareholders. The volume-weighted average price paid per share provides insight into the market's valuation of the company at the time of the buyback. It's also worth noting that the buyback was conducted within the parameters set by regulatory frameworks, such as the EU Market Abuse Regulation and its UK counterpart, ensuring compliance with market standards.
Investors often view share buybacks as a positive signal about a company's future prospects and confidence in its intrinsic value. However, it's important to consider the opportunity cost of the buyback, as funds used for this purpose might alternatively have been invested in growth opportunities or used to pay down debt.
The legal framework governing Shell plc's share buyback is complex, involving both EU and UK market abuse regulations. The transaction's compliance with the EU Market Abuse Regulation (MAR), UK MAR and the EU MAR Delegated Regulation demonstrates Shell's adherence to stringent regulatory standards post-Brexit. These regulations are designed to prevent market manipulation and insider trading, thus ensuring the integrity of financial markets.
Shell's engagement of Citigroup Global Markets Limited to make independent trading decisions reflects a standard practice aimed at avoiding conflicts of interest and ensuring that buybacks are conducted fairly and transparently. The detailed breakdown of individual trades is a requirement under these regulations, providing transparency and allowing for regulatory oversight.
It is important for stakeholders to understand that the off-market limb of the buyback, conducted according to a pre-approved contract with shareholders, is also subject to regulatory compliance. This ensures that all transactions are carried out in a manner that protects shareholder interests and upholds market confidence.
The share buyback by Shell plc can have several market implications. For one, it may signal to the market that the company's management believes the stock is undervalued, which can influence investor perception and potentially lead to an increase in stock demand. Additionally, the reduction in the number of shares outstanding can improve financial metrics, such as return on equity and earnings per share, making the company more attractive to value investors.
However, the market's response to such buybacks can vary. While some investors interpret buybacks as a sign of strength, others may view them as a lack of viable investment opportunities within the company. It's also crucial to monitor the market's liquidity and how such large transactions can affect the stock's volatility in the short term.
Analysing the share buyback in the context of the company's overall strategy, including its investment in new technologies and energy transition initiatives, is essential to understand its long-term market position and sustainability.
Transaction in Own Shares
20 February, 2024
• • • • • • • • • • • • • • • •
Shell plc (the ‘Company’) announces that on 20 February 2024 it purchased the following number of Shares for cancellation.
Aggregated information on Shares purchased according to trading venue:
| Date of purchase | Number of Shares purchased | Highest price paid | Lowest price paid | Volume weighted average price paid per share | Venue | Currency |
| 20/02/2024 | 1,200,000 | LSE | GBP | |||
| 20/02/2024 | - | Chi-X (CXE) | GBP | |||
| 20/02/2024 | - | BATS (BXE) | GBP | |||
| 20/02/2024 | 1,170,000 | XAMS | EUR | |||
| 20/02/2024 | - | CBOE DXE | EUR | |||
| 20/02/2024 | - | TQEX | EUR |
These share purchases form part of the on- and off-market limbs of the Company's existing share buy-back programme previously announced on 1 February 2024.
In respect of this programme, Citigroup Global Markets Limited will make trading decisions in relation to the securities independently of the Company for a period from 1 February 2024 up to and including 26 April 2024.
The on-market limb will be effected within certain pre-set parameters and in accordance with the Company’s general authority to repurchase shares on-market. The off-market limb will be effected in accordance with the Company’s general authority to repurchase shares off-market pursuant to the off-market buyback contract approved by its shareholders and the pre-set parameters set out therein. The programme will be conducted in accordance with Chapter 12 of the Listing Rules and Article 5 of the Market Abuse Regulation 596/2014/EU dealing with buy-back programmes (“EU MAR”) and EU MAR as “onshored” into UK law from the end of the Brexit transition period (at 11:00 pm on 31 December 2020) through the European Union (Withdrawal) Act 2018 (as amended by the European Union (Withdrawal Agreement) Act 2020), and as amended, supplemented, restated, novated, substituted or replaced by the Financial Services Act, 2021 and relevant statutory instruments (including, The Market Abuse (Amendment) (EU Exit) Regulations (SI 2019/310)), from time to time (“UK MAR”) and the Commission Delegated Regulation (EU) 2016/1052 (the “EU MAR Delegated Regulation”) and the EU MAR Delegated Regulation as “onshored” into UK law from the end of the Brexit transition period (at 11:00 pm on 31 December 2020) through the European Union (Withdrawal) Act 2018 (as amended by the European Union (Withdrawal Agreement) Act 2020), and as amended, supplemented, restated, novated, substituted or replaced by the Financial Services Act, 2021 and relevant statutory instruments (including, The Market Abuse (Amendment) (EU Exit) Regulations (SI 2019/310)), from time to time.
In accordance with EU MAR and UK MAR, a breakdown of the individual trades made by Citigroup Global Markets Limited on behalf of the Company as a part of the buy-back programme is detailed below.
Enquiries
Media International: +44 (0) 207 934 5550
Media Americas: +1 832 337 4335
LEI number of Shell plc: 21380068P1DRHMJ8KU70
Classification: Acquisition or disposal of the issuer’s own shares
Attachment
FAQ
How many shares did Shell plc purchase on 20th February 2024?
What is the highest price paid per share by Shell plc on 20th February 2024?
Who will make trading decisions for Shell plc's share buy-back program until 26th April 2024?
In which trading venue did Shell plc purchase 1,170,000 shares on 20th February 2024?
What regulations govern Shell plc's share buy-back program?
