The sharp slide in the Westpac share price has forced the Big Four bank to alter the terms of its $3.5 billion buyback to cover the possibility that it will buy more shares than originally planned.
The end of the buyback has been extended by almost two months into next February from the original closing date of next Friday.
Westpac’s shares have lost about 18% in value since early November and was trading around $21 on Friday.
Westpac said in a statement to the ASX on Friday it said the recent fall in the share price made the rationale for the buyback “even more compelling.”
The bank will now be changing the discount range, which it said would improve the potential return for shareholders, and the closing date for the buyback was being pushed back to February 11, from December 17 previously.
“The lower share price may provide us with the opportunity to buy back and cancel more shares than we originally expected. Accordingly, we are committed to completing our capital management program,” the bank’s chief financial officer Michael Rowland said in the statement.
“The changes to the Buy-Back announced today are designed to ensure that participants are not disadvantaged by recent market movements and increase the likelihood of us buying back $3.5 billion of shares.”
Imagine where the Westpac share price might have been after the recent sell-off if the buyback had not been in place.
The reality is that the near two-month extension effectively supports the shares through into early 2022. Ending it next Friday might have seen the price slide even further without the underpinning of the buyback.
