GRACEKENNEDY has secured the tax waiver it needed to commence a year-long share buy-back, which is now scheduled to commence within three weeks.
"The decision to proceed with the share buy-back follows confirmation from the Ministry of Finance of a tax waiver applicable to tax which would have been otherwise payable on the repurchase of shares by the Company," said a statement issued by GraceKennedy.
The food and financial conglomerate said that it will proceed with the purchase of 2.5 per cent of the company's issued shares following the expiry of 21 days from the date of notice to the Jamaica and Trinidad & Tobago stock exchanges.
"The notices were issued on September 27, 2013," said the press release.
GraceKennedy has further announced that it will not be setting a fixed price for the share repurchase, and that the price for the acquisition of the shares will be the market price at the times of the repurchase.
The company plans to buy back shares when its price is deemed to be below its true value and an opportunity exists to enhance shareholder value, according to Don Wehby, GraceKennedy Group CEO.
"The share repurchase will serve to utilise excess liquidity in the company and raise earnings per share," said the release.
"The GraceKennedy board believes that investing in our own company is an effective use of capital as we see this as a good investment for long-term returns," said Wehby.
Indeed, GraceKennedy's net profit climbed from $2.9 billion for the 12 months to June 30, 2012, to $4.1 bllion for the 12 months to June 30, 2013, which at current price, would put price-to-earnings at around 4.5 times, while its market capitalisation of $18.6 billion, up to yesterday, was 61 per cent of the conglomerate's book value.
Both ratios suggest that the share is currently undervalued.