Recently, there was a company named Akshar Chem who announced Buyback at 590 Rs. At the day of announcement, price of stock was 490 Rs. It was announced that Ex record date is 12th November. I already bought this stock month back at Rs 522 before announcement. Now the stock is trading at 420 rs. I am still holding this stock for buyback as I am in loss. My query is what should be a proper approach to a buyback ? Should I still hold after 12th November? Buyback is still not opened. How a retail investor like me can be educated with this?
There are two types of buyback which a Corporate can do.
Open market Buy back. - If the company has proposed an open market buyback, the company will buy the shares at an appropriate price from the market.
Tender Offer Buyback - In this case, the shareholders can submit or tender portions of their shares within a stipulated time. The company will quote a price for buyback and the quantity that the company will buyback. If there is an oversubscription, there will be some kind of allocation.
Normally in the case of Tender Offer Buy Back, the company will stipulate the amount at which they will buy back and shareholders have to tender the shares.
In case of Akshar Chem it is a Tender Offer Buyback and hence you will need to tender the shares as stipulated by the company. Accepted shares will be given 590 per share irrespective of what the market value of the share is.