TORONTO — Shoppers Drug Mart is initiating a stock buyback program that could see the company repurchasing up to 5% of its outstanding common shares.
The Canadian drug chain said this week that the Toronto Stock Exchange approved its notice to renew its normal course issuer bid (NCIB) program, due to start Feb. 15.
Under the renewed program, Shoppers Drug Mart is authorized to buy back up to 10.2 million of its outstanding common shares, of which there were nearly 204.1 million as of Feb. 6, the company said. The program is scheduled to terminate on Feb. 14, 2014, or earlier if the authorized number of share repurchases is reached.
"The company is renewing the NCIB program because it believes that from time to time the market price of its common shares may be attractive and that at such times the purchase of common shares would be in the best interest of the company and an appropriate use of corporate funds in light of potential benefits to remaining shareholders," Shoppers Drug Mart stated.
Under its previous buyback program, which expired Thursday, Shoppers Drug Mart had repurchased more than 8.3 million common shares at a cost of $346 million (Canadian) through Feb. 6, at an average price of $41.60 per share.
Shoppers Drug Mart shares closed up 20 cents, a gain of about 0.5%, to $42.24 on Feb. 14, about midway between their 52-week low of $39.32 and high of $44.44.
Last week, the drug chain’s board declared a dividend of 28.5 cents per common share, representing an increase in the company’s quarterly dividend payments of 7.5%, for an annualized dividend of $1.14 per share.
"The board’s decision to increase the dividend and renew the share repurchase program reinforces the company’s commitment to return excess cash to shareholders," Brad Lukow, executive vice president and chief financial officer at Shoppers Drug Mart, said in a statement last week when the company reported fiscal-year results. " It is a testament to the continued strength of our free cash flow generation capabilities and our ability to support both growth initiatives and shareholder distributions in order to enhance long-term shareholder value."
