THE COUNTRY’S leading casual dining chain operator Max’s Group Inc. has earmarked P350 million for a share buyback program for the next two years.
Shares of Max’s Group rose by 3.3 percent to close at P15.02 on Friday, the day when the buyback program was announced, giving it a market capitalization of P15.8 billion.
Companies typically buy back shares from the open market when they deem that company shares are undervalued by the market. By reducing the number of outstanding shares, the earnings per share increase. However, only companies with retained earnings are allowed to buy back shares.
In a disclosure to the Philippine Stock Exchange, Max’s Group – formerly Pancake House Inc. – said its board of directors had approved the release of funds to buy the company’s own shares at the open market.
“This is in line with the corporation’s cash management activities seen to benefit shareholders in the long term,” Max’s Group said.
As of market closing of P14.54 per share on Feb. 4 – the day the buyback program started – the amount was equivalent to 2.2 percent of Max’s Group’s total shares.
The buyback program will run until February 3, 2018.
Max’s Group Inc. is expected to breach a 1,000 store network in six years or nearly double the current store count, with overseas expansion and franchising seen a crucial component of its growth story.