This is a short presentation on Buyback and delisting backed by some instances.I hope this would help a lot in understanding the basic concept.In fact this phenomenon is lot more observed these days and it's important to know the basic facts behind this.

2. Buy Back
 The repurchase of outstanding shares (repurchase) by a
company in order to reduce the number of shares in the
market. Companies buy back shares either to increase the
value of the shares still available (reducing supply), or to
eliminate any threats by shareholders who may be looking for a
controlling stake.
 In a buyback program, the shares are bought back by the
company itself and the shares bought back are extinguished.
This leads to a REDUCTION of capital for the company.
 Stock buyback programs take advantage of supply and demand
by reducing the number of shares outstanding, increasing EPS,
shareholder value, float and ultimately the price of stock.

3. How Buyback is done?
 Tender offer : Shareholders may be presented with a tender
offer by the company to submit, or tender, a portion or all of
their shares within a certain time frame.
 The tender offer will stipulate both the number of shares the
company is looking to repurchase and the price range they are
willing to pay. When investors take up the offer, they will state
the number of shares they want to tender along with the price
they are willing to accept.
 Once the company has received all of the offers, it will find the
right mix to buy the shares at the lowest cost.

4.  Open market : The second alternative a company has
is to buy shares on the open market, just like an
individual investor would, at the market price.
 It is important to note, however, that when a
company announces a buyback it is usually perceived
by the market as a positive thing, which often causes
the share price to shoot up.

5. Why companies buy back?
 Excess cash: Consider a company which possesses huge cash
reserve but has no upcoming projects to invest into. In that case
the company may plan to invest in itself and offer the existing
shareholders an option to sell their shares to the company at an
attractive price.
 Undervalued stocks: A company may also go for buybacks with
an aim of projecting better valuation of their stocks when they
think it is undervalued in the market. The reason is companies buy
its shares at higher price than current market price which indicates
that its worth in the market is more than the present value.
 Dilution: Another reason that a company may move forward with a
buyback is to reduce the dilution that is often caused by
generous employee stock options plan.

6.  Capital structure: Some companies may also use it as a tool to
change their capital structure i.e. debt-equity ratio in specific. By
buying back the shares from open market, a company may increase
its reliance on the debt financing rather than equity financing.
 Improving Financial ratios: Share buybacks reduce the number of
shares outstanding. Once a company purchases its shares, it often
cancels them or keeps them as treasury shares and reduces the
number of shares outstanding, in the process.
 Tax benefit: When excess cash is used to buyback company stock, in
lieu of increasing or paying dividends, shareholders often have the
opportunity to defer capital gains AND lower their tax bill if the
stock price increases.

7. Potential Pitfalls
 Manipulation of Earnings : Companies could buyback
shares and appear to beat consensus estimates that were
based on a larger number of outstanding shares.
 Execution of Buyback: A buyback announcement may
initially boost the price of a stock, but this phenomenon
(when it occurs) is usually short lived.

8. APPLE INC.
 Apple Inc., formerly Apple Computer, Inc., is a multinational
corporation that creates consumer electronics, personal
computers, computer software, and commercial server, and is
a digital distributor of media content.
 It was established on April 1, 1976, by Steve jobs, Steve
Wozniak and Ronald Wayne to sell the Apple I personal
computer kit.
 Apple originally went public on December 12, 1980, with
an IPO at US$22.00 per share.
 By April,2015, Apple announced that it would increase its
capital return program from $130 billion by December 2015 to
$200 billion by March 2017.

9.  The Board has also approved an increase of 11 percent to the
Company’s quarterly dividend, and has declared a dividend of
$.52 per share, payable on May 14, 2015 to shareholders of
record as of the close of business on May 11, 2015.
 Apple’s quarterly dividend increased from $0.47 per quarter to
$0.52 or 10.6%.
 Apple announced a 7 for 1 stock split. In other words every
share of AAPL will soon become 7 shares of AAPL in order to
ensure liquidity.

10. Reasons for Buyback
 Plenty of cash- At the end of last quarter, Apple had about
$203 billion of cash and investments on its balance sheet
which needs to be invested somewhere to return profits to the
shareholder.
 Tax benefits- The vast majority of Apple's cash -- $181.1 billion
at the end of June -- is held outside the U.S. for tax purposes
which would be subjected to the repatriation tax up to 35%.
Since Apple doesn't want to pay the stiff repatriation taxes, It
is borrowing money to pay share buybacks hoping the
government to bring down the tax through corporate tax
reform.

11.  More control over management- Buying shares back also
gives board/management/company more control because
there are less voting shares out in the public.
 Dilution- A lot of companies contract third parties and pay
them in equity rather than cash. In order to pay with equity,
there has to be stock available to give. A company can issue
more shares, but it would dilute the stock and may adversely
impact the stock price. This gives a company like Apple extra
shares to use for contract work or MnA activity without risking
dilution.
 Undervalued stocks- Buying shares back may indicate that the
company believes the price of the stock is low. It reduces the
amount of dividends they have to pay to outsiders and at the
same time gives them the ability to re-issue those shares later
at a higher price when the stock is trading much more
favorably.

12. Implications
 A P/E ratio of 15 and 13% increase from the buyback may
result in a share price of $165.

13.  Apple's share buyback program is estimated to increase the
share price by 13%.

14.  Apple’s quarterly dividend increased from $0.47 per quarter to
$0.52 or 10.6%. It looks like either Apple may raise the
dividend by a larger amount or has a bit of a cushion built in so
that it could announce $200 billion for its capital return
program.

15.  Currently Apple is in a blackout period that lasts until the
day after it announces its earnings on July 21. Thus, the
company is not allowed to buy back stock. The black out
period is five weeks before every earnings announcement.

16. Delisting
 Definition: The removal of a listed security from the
exchange on which it trades. Stock is removed from an
exchange because the company for which the stock is issued,
whether voluntarily or involuntarily, is not in compliance
with the listing requirements of the
exchange.
 The money is taken from the Promoter’s own account to buy
back all the shares.
 The number of shares in general is not changed.
 The promoter can make a company private by delisting all
the shares.

17. Various Reasons for Delisting:
 The reasons for delisting include violating regulations and/or
failing to meet financial specifications set out by the stock
exchange. Companies that are delisted are not necessarily
bankrupt, and may continue trading over the counter.
Listing Requirements: In order for a stock to be traded on an
exchange, the company that issues the stock must meet the
listing requirements set out by the exchange. Listing
requirements include minimum share prices, certain financial
ratios, minimum sales levels, and so on. If listing requirements
are not met by a company, the exchange that lists the
company's stock will probably issue a warning of non-
compliance to the company.

18. If the company's failure to meet listing requirements continues,
the exchange may delist the company's stock.
Switching from one exchange to other: It might see a mundane
action for a company to switch stock exchanges. It happens every
now and then when companies change to the Nasdaq from the
New York Stock Exchange, or vice versa.
The Company becomes a private company (the company might get
bought by private equity buyers or the company might want to
omit the additional bureaucratic procedures that come with being
listed on a stock exchange like publication and disclosure
requirements)

19. The company (usually the legal entity) is being liquidated (for
example the owners of a subsidiary company that is listed
independently on an exchange might chose to liquidate the
subsidiary and bring all the assets into the parent company and
have only the parent company listed on the exchange).
The company declares a Bankruptcy (for example a company can
default on paying their debt and file for bankruptcy protection).

20. Process of a delisting
1. In case a delisting is initiated by the Exchange, often it will issue
warnings to the company first. If the company does still not comply
with the listing rules after a while, the exchange will proceed to
announce a Delisting.
2. If a Company decides to delist itself it has to request approval from
the exchange and complete the appropriate documentation.
3. The decision to delist the company has to be announced and made
public.
4. All shareholders will be notified and given time to think on what
they want to do with the shares. (Often delisting from an exchange
is followed by removal from the security from the Central Securities
Depository of a country and cross border settlement to another
country has to be arranged).
5. On the effective day of the Delisting the shares will cease trading on
the Exchange and they will be booked out of the accounts of
custodians, banks and broker dealers.

21. Effects of Delisting
The financial market liquidity has a causal impact on both real
and financial firm decisions.
A higher benefit will accrue to those who buy the stock earlier
and hold on till after the delisting announcement.

22. Essar Oil
 Essar Oil is an India-based company engaged in the exploration
and production of oil and natural gas, refining of crude oil, and
marketing of petroleum products.
 It is a part of the Essar Group based in Mumbai and operates
a major refinery in Vadinar, Gujarat, India, which made it the
second largest non-state refiner in India in 2009.
 Essar Oil was incorporated by the Essar group on 12/09/1989
 The company originally went public on December 07/02/1995.
 Essar oil had announced delisting from the stock exchanges on
June 20, 2014.

23. Delisting Offer
 As per the announcement, Essar Group would buy all
the shares it doesn't own in Essar Oil.
 The number of equity shares held by public
shareholders are 137.123 million or 27.53%.
 The promoter firm, Essar Energy Holdings(EEHL),
incorporated under the laws of Mauritius, holds
71.22% stake in Essar Oil.
 The floor price has been set at Rs. 108.18. At this floor
price, the Group will have to spend Rs. 14,800 millions
to acquire all outstanding shares.

24. Delisting Progress
 Delisting approved by SEBI, NSE and BSE.
 Reverse book building process has recently received a
green flag.
 According to BSE data, while shares of Essar Oil have
been trading in the range of Rs.100-110 apiece for most
of last year, the stock has soared by almost 95% in the
past one month alone.

25. What is Reverse Book Building?
A reverse book-building process is a mechanism of
delisting under which shareholders tender their shares
at their prices of preference. Thereafter, based on the
preference of the majority of the shareholders, a
delisting price is fixed. But the delisting price cannot go
below a floor price already fixed by the company.

26. Reasons for Delisting
 The company defended the delisting action with the
following reply:
Essar Energy Holdings Ltd (the parent of Essar Oil)
believes that the company requires sustained,
substantial investments to develop and grow its
business (especially refining and marketing) and a full
ownership will provide it with increased operational
and financial flexibility to support their business and
strategic needs.

27.  The promoters planned to delist Essar Oil from the
Indian stock markets before selling a 49 per cent stake
in the company to Russian oil giant Rosneft for $3.2
billion (Rs 20,480 crore).
 The deal would provide Rosneft access to a world-class
refinery and a retail fuel chain, while Essar Oil would
receive assured fuel for 10 years.

28. Effects of Delisting
 At current market price, Essar Oil is about 7.2 times
its book value, which is higher than its industry peers
Reliance Industries (1.6x), Bharat Petroleum
Corporation (2.6x), Hindustan Petroleum Corporation
(1.1x) and Mangalore Refinery and Petrochemicals
(1.6x).

29. Outlook
Stock exchange delistings are important for a
functioning capital market. Going private can be used
to strategically reposition the company with a
subsequent IPO as and when it becomes a sensible
option again.
Moreover, as financial investors usually keep an
investment in their portfolio for only three to five
years, one possible exit route for them is a stock
market

30. Thank You