Qube (ASX:QUB) share price rises amid $400m off-market buyback

Qube’s shares are rising today. Here’s why…

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Key points

  • The Qube share price is rising on Monday.
  • Investors have been buying shares after it announced a $400 million share buyback.
  • This will be undertaken offmarket, with shareholders invited to offer shares at a 5% to 14% discount.

The Qube Holdings Ltd (ASX: QUB) share price has started the week positively.

In morning trade, the logistics facilities company’s shares are up 3% to $3.10.

Why is the Qube share price rising today?

The catalyst for the rise in the Qube share price today has been the release of a positive announcement this morning.

According to the release, following a strong performance in the first half of FY 2022 and the completion of the Moorebank Logistics Park transaction, Qube will return up to $400 million of capital to shareholders over the remainder of FY 2022.

The company will do this via an off-market buyback program conducted via a tender process that aims to complete in May.

Management commentary

Qube’s Managing Director, Paul Digney, said “The completion of the sale of Moorebank Logistics Park, coupled with Qube’s strong financial performance in achieving record underlying earnings (NPATA) in FY21 and H1 FY22, have contributed to a strong capital position, allowing us to announce this off-market Buy-Back.”

Qube’s Chairman, Allan Davies, revealed that the buyback program was judged to be the best way to return funds to shareholders.

He explained: “The Board has carefully considered how best to return capital to shareholders and we believe that the off-market Buy-Back announced today is the most effective method to return significant value to all our shareholders and optimise our capital structure at this time.”

“It enables a higher number of Qube shares to be bought back in a shorter timeframe and it reduces our share count faster than an on-market buy-back of Qube shares. In turn, a lower capital base and share count supports Qube’s future earnings per share and dividends per share, all things being equal,” Davies added.

What’s next?

Qube advised that it will repurchase shares under the buyback at a discount of between 5% and 14% to the volume weighted average price (VWAP) of the Qube share price for the five trading days up to and including the closing date of 13 May.

The buyback price will comprise a capital component of $1.61 per share and a fully franked deemed dividend equal to the buyback price less the $1.61 per share.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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