Transaction in Own Shares
- None.
- None.
Insights
The share buyback program undertaken by Shell plc is a significant financial move that can have multiple implications for the company's valuation and stock market performance. A share buyback, also known as a share repurchase, is when a company buys back its own shares from the marketplace. The effect of this action is a reduction in the number of outstanding shares, which often leads to an increase in the earnings per share (EPS) ratio, assuming net income remains constant.
From a market research perspective, this can be interpreted as a signal of confidence from the company's management in its financial health and future prospects. It can also be seen as a method of returning value to shareholders, as the reduction in share count can boost share price. Additionally, buybacks can be a tax-efficient way to return money to shareholders compared to dividends, especially in jurisdictions where capital gains are taxed at a lower rate than dividends.
However, it's crucial to monitor the funding of such buybacks. If a company is using debt to finance repurchases, it could potentially increase financial risk. In the case of Shell, the buyback is part of an existing program, which may suggest a premeditated and strategic approach rather than a reactive one.
Examining the financial implications of Shell's share buyback, the key metrics to consider include the impact on the company's balance sheet and cash reserves. A buyback financed through existing cash reserves could indicate strong liquidity, whereas reliance on debt could raise concerns about leverage levels.
Investors should assess the price paid for the shares compared to the current market value and historical prices. The volume-weighted average price (VWAP) Shell paid per share can provide insight into the premium the company is willing to offer, which in turn affects the cost of the buyback.
Furthermore, the decision to execute the buyback through both on-market and off-market transactions must be scrutinized. Off-market transactions, often at a negotiated price, can sometimes lead to better value for the repurchasing company but require careful negotiation to ensure fairness for all stakeholders.
From a legal standpoint, the share buyback must adhere to regulatory frameworks such as the EU Market Abuse Regulation (EU MAR) and the UK Market Abuse Regulation (UK MAR), which govern the conduct of buy-back programmes. Compliance with these regulations ensures transparency and fairness in the market, preventing market manipulation and insider trading.
The detailed breakdown of individual trades provided by Citigroup Global Markets Limited on behalf of Shell as part of the buy-back program demonstrates adherence to the disclosure requirements mandated by these regulations. This level of transparency is crucial for maintaining investor trust and for the proper functioning of financial markets.
It's also important to note that the share buyback has been approved by shareholders and falls within the company's general authority to repurchase shares, which underscores the importance of corporate governance in such financial decisions.
Transaction in Own Shares
1 February, 2024
• • • • • • • • • • • • • • • •
Shell plc (the ‘Company’) announces that on 1 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 |
| 01/02/2024 | 900,000 | LSE | GBP | |||
| 01/02/2024 | - | Chi-X (CXE) | GBP | |||
| 01/02/2024 | - | BATS (BXE) | GBP | |||
| 01/02/2024 | 900,000 | XAMS | EUR | |||
| 01/02/2024 | - | CBOE DXE | EUR | |||
| 01/02/2024 | - | 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 for cancellation on February 1, 2024?
At what price did Shell plc purchase the shares on the London Stock Exchange?
Who will make trading decisions in relation to the securities independently of Shell plc?
What regulations govern the share buyback program?
What is the LEI number of Shell plc?
