Stock Buyback

A stock buyback occurs when a company repurchases its own shares from the marketplace. Companies may decide on a stock buyback if they feel their shares are undervalued or if they have excess cash on their balance sheets. If the company intends to acquire a large percentage of outstanding shares, it may be done through a tender offer with shareholders receiving a premium over the market price. By repurchasing all outstanding shares, a stock buyback can be used to turn a public company into a private one.

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