Buyback
Buyback is a repurchase of company's stocks in order to reduce number of shares outstanding.
Buybacks are conducted in order to increase value of shares that current shareholders owns, or to increase the proportion of shares the company owns in order to eliminate potential takeover threats by current shareholders with high stakes.
Buybacks are done in two different ways: either the company will make a tender offer to buy shares back in a short period, or it will continuously buy shares on the open market over a longer period of time. If the company decides to present a tender offer to shareholders, it will offer a premium to the current market price and, therefore, attract more shareholders.
| Related Terms: Treasury Stock |
 |