Infomedia Plans to Repurchase Up to 18.8 Million Shares Over 12 Months
Infomedia Limited has announced an on-market share buyback of up to 5% of its issued capital, signalling confidence in its financial strength and commitment to shareholder value. The buyback will be executed over the next 12 months, leveraging the company’s robust cash reserves.
- On-market buyback of up to 18.8 million shares (5% of issued capital)
- Buyback period spans 12 months starting 3 March 2025
- Strong cash position with $78 million in cash and zero debt
- Shares purchased will be cancelled, reducing total shares on issue
- Buyback price capped at 5% above recent volume weighted average price
Infomedia’s Strategic Capital Allocation
Infomedia Limited (ASX: IFM), a global leader in data-as-a-service (DaaS) and software-as-a-service (SaaS) solutions for the automotive industry, has announced a significant on-market share buyback program. The company plans to repurchase up to 5% of its issued capital, equating to approximately 18.8 million ordinary shares, over the course of the next 12 months starting 3 March 2025.
This move underscores Infomedia’s confidence in its financial health and operational outlook. With a strong cash balance of $78 million and no debt on its books, the company is well positioned to return capital to shareholders while maintaining the flexibility to invest in organic growth and product development.
Balancing Growth and Shareholder Returns
Infomedia emphasises that capital allocation remains focused on enhancing its product offerings and driving organic growth. The buyback is designed to complement this strategy by optimising the company’s capital structure and delivering value to shareholders through a reduction in shares on issue.
Shares repurchased under the program will be cancelled, effectively increasing earnings per share and potentially supporting the share price. The buyback price will be capped at no more than 5% above the volume weighted average price over the five trading days preceding each purchase, ensuring disciplined execution aligned with market conditions.
Market Conditions and Flexibility
The company has made clear that the actual number of shares bought back will depend on various factors including market conditions, share price movements, and available investment opportunities. Infomedia retains the right to vary, suspend, or terminate the buyback at any time, providing flexibility to respond to changing circumstances.
Notably, the buyback does not require shareholder approval and will comply with the Corporations Act’s "10/12" limit, which restricts the volume of shares that can be repurchased within a 12-month period.
Implications for Investors
For investors, this announcement signals a vote of confidence from Infomedia’s board in the company’s future prospects and financial stability. The buyback program may also serve as a catalyst for share price support, especially if the company executes purchases opportunistically during periods of market weakness.
However, the company’s commitment to maintaining a strong balance sheet and investing in growth initiatives suggests that the buyback is part of a balanced capital management approach rather than a signal of limited growth opportunities.
Bottom Line?
Infomedia’s buyback balances shareholder returns with growth ambitions, setting the stage for measured capital management in 2025.
Questions in the middle?
- How aggressively will Infomedia execute the buyback amid market volatility?
- Will the buyback impact Infomedia’s capacity to invest in new product innovations?
- How will the market interpret the buyback in relation to Infomedia’s growth outlook?
