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RIL's $2.1 billion share buyback to open Feb 1

RIL will buy back up to 120 million shares, or 3.7 per cent of outstanding equity. Its controlling shareholders, who own 44.7 per cent of the equity, will not participate in the offer.

BT Online Bureau | January 24, 2012 | Updated 11:49 IST

Reliance Industries (RIL) will open its share buyback from February 1 and close the offer on January 19 next year, the company said in an advertisement in a national daily on Tuesday.

The Mukesh Ambani-led firm, India's biggest company by market value, had on Friday announced the decision to spend up to $2.1 billion to buy back shares at a maximum price of Rs 870 each, or about 10 per cent premium over its current share price.

RIL will buy back up to 120 million shares, or 3.7 per cent of outstanding equity. Its controlling shareholders, who own 44.7 per cent of the equity, will not participate in the offer.

RIL's market value tumbled 35 per cent in 2011, mainly because of worries that falling output from its offshore gas fields would hurt its long-term growth. The stock underperformed the main Mumbai market, which fell nearly 25 per cent in the same period.

PERSPECTIVE:Why is RIL opting for share buyback?

The share buyback is expected to increase shareholder value by reducing the number of shares and increasing earnings per share, RIL said in the advertisement.

This is the company's first share buyback since 2005 and the biggest ever in India. Citigroup and Bank of America-Merrill Lynch are the managers for the buyback offer.

Shares of the company lost over 2.82 per cent on Monday. At 11.45 am, RIL shares were trading at Rs 783, 1.56 per cent higher from the previous close.

- With agency inputs

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