Westpac’s amended buyback ensures no one’s disadvantaged

Westpac Bank (ASX: WBC) has decided to tinker with certain key terms of an off-market buyback of up $3.5bn that the bank announced to the market on 1 November this year.

While it has both positive and negative implications, news of the buyback has done little to move the share price – off by around 20% since late October – either up or down in early trade this morning.

The recent price reduction gives the bank the opportunity to buy back more shares than was originally contemplated but has implications for buy-back participants.

For example, as a function of the current share price, the sale proceeds and franking credits that are distributed to buy-back participants are potentially reduced.

Amended terms

Having weighed up its options, the bank has decided to amend certain key terms of the buy-back:

The discount range: The buyback tender discount range has been changed to 0% to 10%, from 8% to 14%, to improve the potential return for eligible shareholders.

Timing: The closing date for the tender period has been extended to 7:00pm (Sydney time) on Friday, February 11, to provide shareholders with additional time to assess the revised buyback terms.

Should the final buy-back demand be less than $3.5bn, Westpac intends to commence an on-market buy-back for the residual amount, subject to market conditions and final approvals.

Commenting on changes to the buy-back announced today Westpac CEO Michael Rowland noted:

“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.”

Meantime, Westpac expects to provide an update on its first quarter 2022 earnings in the week commencing 31 January 2022.