In a buyback of shares, a company repurchases its own shares from existing shareholders. Here's what happens step-by-step:
- Announcement: The company announces the buyback, including number of shares, price, and method.
- Eligibility Date (Record Date): Shareholders holding shares on this date are eligible to participate.
- Tender Offer or Open Market:
- Tender Offer: Shareholders are invited to offer (tender) their shares at a specified price.
- Open Market: The company buys shares directly from the market over time.
- Shareholder Response: Eligible shareholders can choose to tender their shares if they wish to sell.
- Payment and Share Reduction: The company pays shareholders for the accepted shares. These shares are then canceled, reducing total outstanding shares.
