3M Co said today that it plans to conduct a share buyback program in five years through the year 2017. The company, which also has film products used in flat-panel TVs aside from Post-Its, said that it could buy back shares worth up to $22 billion. Reuters said in its report that 3M's move makes it one of many companies who have announced big returns on capital to its shareholders. Moreover, the report noted that including 3M's plan, a total of arond $460 billion in share buybacks have been announced this year, the highest achieved since 2007.
Upon the announcement, shares of the company rose up to 3% after it also announced plans to increase its quarterly dividend by a third and strategic acquisitions worth between $5 billion and $10 billion through 2017.
According to Morgan Stanley analyst Nigel Coe, the dividend increase plans alone signaled investors' confidence in the US company, while the acquisition plan indicated a major shift in the US phone known for being conservative historically.
3M also added on Tuesday that it is expecting its share repurchases between this year to 2017 between $17 billion to $22 billion, which was a significant increase from an earlier estimate of $7.5 billion to $15 billion. The report said the top end of the new range represented around a quarter of the market value of 3M, which makes its plan the largest capital return possible in terns of percentage among US companies which have announced share buybacks this year. Some of the companies who have announced to acquire their shares back include Microsoft Corp, Boeing Co and Deere & Co.
The report explained that companies typically acquire their shares back in order to increase its remaining stock value. However, the report noted that the recent share buyback authorizations like 3M are at or close to record highs.
S&P Dow Jones Indices analyst Howard Silverblatt told Reuters, "At this point in time, there does appear to be excess cash (and) corporations do not want to sit on such a large asset, especially considering the low return that their market instruments are making."
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