India's Infosys approves
up to $2 billion buyback of shares
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[August 19, 2017]
By Sankalp Phartiyal and Abhirup Roy
MUMBAI (Reuters) - India's second-biggest
IT firm Infosys <INFY.NS> said on Saturday it will buy back shares worth
up to 130 billion rupees ($2 billion), a day after Vishal Sikka resigned
as chief executive after a long-running feud with the company's
The board of Bengaluru-headquartered Infosys approved the repurchase of
113 million shares at 1,150 rupees apiece, the company said in a stock
exchange filing, returning cash to investors at a substantial premium to
Friday's closing price of 923.25 rupees.
It is also at a premium of 17.9 percent to closing price on Thursday,
the day the company informed the exchanges about the board meeting to
consider a buyback.
The announcement of the company's first-ever buyback could offer at
least some respite to Infosys shareholders on Monday after the value of
their holdings fell nearly 10 percent on Friday following Sikka's
"If the overall market sentiment is good, you could see a 4-5 percent
recovery looking at this price," said Arun Kejriwal, founder of Kejriwal
Research & Investment Services.
A senior official at state-run Life Insurance Corp (LIC), which owns a 7
percent stake in Infosys, said they were closely monitoring the
situation at the company and were looking to meet with the management
before deciding to participate in the buyback.
Friday's sell-off prompted three U.S. law firms specializing in class
action lawsuits to announce that they are probing potential securities
claims on behalf of Infosys investors that have suffered losses.
In a statement late on Friday, New York-based Rosen Law Firm called on
aggrieved shareholders to come forward and said that it was
investigating whether "Infosys may have issued materially misleading
business information to the investing public."
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The logo of Infosys is pictured inside the company's headquarters in
Bengaluru, India, April 13, 2017. REUTERS/Abhishek N. Chinnappa
The other two firms investigating claims are Goldberg Law and Pomerantz LLP,
which said they were probing whether Infosys or any of its officers, or
directors engaged in securities fraud or other unlawful business practices, in
light of the allegations of governance lapses made by founder executives against
the board of the company.
Infosys' American Depositary Receipts closed over 7 percent lower at $14.79
Friday on the Nasdaq.
Infosys was not immediately available for comment on statements made by the
U.S.-based law firms.
Sikka, the first non-founder chief executive of the company, announced his
sudden resignation following a protracted war of words with the founders group,
led by Narayana Murthy.
His replacement will take on the task of improving the company's fortunes at a
time when the $150 billion Indian IT services sector is facing a raft of
"The share buyback is unlikely to soothe investor sentiment," said R.K. Gupta,
managing director at Taurus Asset Management which owns shares in Infosys.
"What will matter in the long run is how well a new management team can lead the
company and quickly tap the market for transformation services such as cloud."
Bigger, cash-rich rival Tata Consultancy Services <TCS.NS> announced a buyback
of up to 160 billion rupees earlier this year.
(Reporting by Sankalp Phartiyal and Abhirup Roy; Additional reporting by Euan
Rocha; Editing by Richard Pullin and Toby Chopra)
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