Tenaris to Commence a USD 300 million Third Tranche of its USD 1.2 Billion Share Buyback Program

Rhea-AI Summary

Tenaris S.A. announced the commencement of a USD 300 million third tranche of its USD 1.2 billion Share Buyback Program, aiming to buy back ordinary shares in the open market for cancellation. The program is executed through a buyback agreement with a primary financial institution, ensuring compliance with regulations. The third tranche starts on May 13, 2024, and ends by August 12, 2024.

Insights

Financial Analyst

The announcement of Tenaris's continuation of its significant share buyback program, specifically the third tranche worth 300 million, reflects a strategic approach to capital allocation. From a financial perspective, share buybacks are a mechanism used by companies to return value to shareholders, as they can potentially increase earnings per share by reducing the amount of outstanding stock. For Tenaris, a company operating in the steel pipe manufacturing sector, such a move might indicate a strong cash position and confidence in the company's long-term prospects, as buybacks are often executed when a company believes its shares are undervalued. It's also worth noting that the buyback is slated to occur via a non-discretionary agreement, suggesting an effort to avoid any insider trading implications by outsourcing the decision-making process to a third party. However, investors should be mindful of the possibility that buybacks can sometimes be used to artificially inflate stock prices and it is vital to assess whether the current stock price truly reflects the company's intrinsic value before reacting to such news.

Corporate Governance Expert

The governance aspects of Tenaris's share buyback program are notable. The company has engaged an independent financial institution to manage the buyback process, which aims to mitigate any potential conflicts of interest and adhere to the stringent requirements of the Market Abuse Regulation and other applicable regulations. This underlines the company's commitment to transparency and good corporate governance practices. For stakeholders, this could enhance trust in management's handling of the buyback process. However, it's important for shareholders to consider the broader implications of share buybacks on corporate governance, such as the potential reduction in public float and the effects on shareholder voting power. The fact that the buyback is executed under the authority of a shareholder resolution from 2020, with a cap at 10% of the company's capital, provides a framework that aligns with shareholder interests. Still, the continuous monitoring of governance practices surrounding this buyback program will be important for maintaining shareholder confidence.

LUXEMBOURG, May 12, 2024 (GLOBE NEWSWIRE) -- Tenaris S.A. (NYSE and Mexico: TS and EXM Italy: TEN) (“Tenaris”) announced today that pursuant to its Share Buyback Program (the “Program”) announced on November 1, 2023, covering up to USD 1.2 billion to be executed in the open market with the intent to cancel the ordinary shares acquired through the Program, Tenaris has entered into a non-discretionary buyback agreement with a primary financial institution (the “Bank”).

The Bank will make its trading decisions concerning the timing of the purchases of Tenaris’s ordinary shares independently of and uninfluenced by Tenaris and will act in compliance with applicable rules and regulations, including the Market Abuse Regulation 596/2014 and the Commission Delegated Regulation (EU) 2016/1052 (the “Regulations”). Under the buyback agreement, purchases of shares may continue during any closed periods of Tenaris in accordance with the Regulations.

This USD 300 million third tranche of the Program shall start on May 13, 2024, and end no later than August 12, 2024. Ordinary shares purchased under the Program will be cancelled in due course.

Any buyback of ordinary shares in relation to this announcement will be carried out under the authority granted by the general meeting of shareholders held on June 2, 2020, up to a maximum of 10% of the Company’s capital, or any renewed or extended authorization to be granted at a future general meeting of the Company.

Some of the statements contained in this press release are “forward-looking statements”. Forward-looking statements are based on management’s current views and assumptions and involve known and unknown risks that could cause actual results, performance or events to differ materially from those expressed or implied by those statements. These risks include but are not limited to risks arising from uncertainties as to future oil and gas prices and their impact on investment programs by oil and gas companies.

Tenaris is a leading global supplier of steel tubes and related services for the world’s energy industry and certain other industrial applications.

Giovanni Sardagna        
Tenaris
1-888-300-5432
www.tenaris.com

FAQ

When does the third tranche of Tenaris' Share Buyback Program start?

The third tranche of the Share Buyback Program starts on May 13, 2024.

What is the total value of Tenaris' Share Buyback Program?

The Share Buyback Program has a total value of USD 1.2 billion.

How are the ordinary shares acquired through the program intended to be used?

The ordinary shares acquired through the program will be cancelled in due course.

Who will make trading decisions concerning the timing of share purchases?

The Bank will make trading decisions independently of and uninfluenced by Tenaris.

What is the maximum percentage of the Company's capital allowed for share buybacks?

Up to a maximum of 10% of the Company's capital is allowed for share buybacks.

What regulations govern the share buyback process?

The share buyback process is governed by the Market Abuse Regulation 596/2014 and the Commission Delegated Regulation (EU) 2016/1052.