Spirits giant Diageo plc has announced that it has entered into a non-discretionary agreement with Goldman Sachs International (GSI) to enable the company to buy back shares with a value of up to £0.55 billion.
The agreement commenced today (26 November 2021) and will end no later than 4 March 2022.
The company added that it aims to reduce the share capital of Diageo through these repurchases, and all shares repurchased under this agreement will be cancelled.
Return Of Capital (ROC) Programme
The move is part of the next tranche of its previously announced return of capital (ROC) programme of up to £4.5 billion to shareholders by 30 June 2024.
Under the first phase of the ROC programme, which was completed on 31 January 2020, Diageo repurchased shares worth £1.25 billion.
On 12 May 2021, Diageo initiated the second phase of its ROC programme of up to £1.0 billion, to be completed by the end of fiscal 22.
Under the first tranche of the second phase, which was completed on 12 November 2021, Diageo repurchased shares worth £0.45 billion.
The latest share buyback tranche of up to £0.55 billion will take place within the limitations of Diageo’s existing general authority to repurchase up to 233,611,282 shares granted at its 2021 annual general meeting.
After taking account of the number of shares repurchased under the first tranche of the second phase of the ROC programme, the maximum number of shares that can be bought back in the second tranche of the second phase is 231,359,356.
Further Execution Phases
The company will announce further execution phases of the ROC programme in due course, and utilise the most appropriate mechanic of either share buybacks or special dividends, depending on market conditions.
Goldman Sachs International will make its trading decisions concerning Diageo’s securities independently of and uninfluenced by Diageo, the company added.
Any repurchase of shares by Diageo contemplated by this announcement will be carried out on the London Stock Exchange and/or other recognised investment exchange(s).
Earlier this month, Diageo said it expects organic sales growth to be between 5% and 7% for the financial period 2023 to 2025, compared with 4% to 6% growth during 2017 to 2019, as it laid out its medium-term targets.