Reuters' share repurchase: Stepping off a pile of cash

Paul Stonham

European Management Journal, 1995, vol. 13, issue 1, 99-109

Abstract: In 1993, Reuters, the international news and financial information group in the UK, spent £350 million in buying back its own shares, the largest repurchase operation in Britain since GEC's giant share buy-back in the mid-1980s. The cash distribution was deemed successful: shareholders over-tendered nearly seven times, the share price immediately went higher and the financial press was approving. Distributions by corporations to their shareholders in the form of share buy-backs are much more common and familiar an aspect of corporate finance in the US than in the UK. Share repurchase can be used as an alternative to cash distribution by dividend. This case study examines theoretical and practical aspects of this innovative financial manoeuvre in the UK.

Date: 1995
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