Frasers Group begins another £70m share buyback just days before new boss takes over at retail empire
- Group has already handed back around £300m to investors since May last year
- Mike Ashely’s future son-in-law set to take over as new CEO next month
Mike Ashley’s Frasers Group has began to buy back £70million in its own shares just days before his future son-in-law takes over as the retailer’s new boss.
The company, which owns brands including Sports Direct, Evan Cycles and House of Fraser, has already handed back around £300million to investors since May last year.
It announced the new buyback programme earlier this month, saying the aim was to ‘reduce the share capital of the company’.
Handing over: Mike Ashely is stepping down next month
Businesses usually buy shares and hold them in reserve to reduce the number available to the public.
This tends to push up the value of the stock but it is also a way that firms return cash to investors other than paying dividends.
Sceptics say it can amount to manipulating the stock price.
Despite the launch of the buyback, Frasers Group shares fell 1.3 per cent to 681p in morning trading, as part of a wider market sell-off.
The stock has fallen by around 13 per cent since the start of the year.
Share buybacks have been popular – figures show the biggest companies listed in London have already committed to spending almost £33billion this year through buybacks.
It also comes just days before Michael Murray, who is engaged to Ashley’s daughter Anna, becoming chief executive of the retail empire.
Murray will take over at the beginning of next month after the tycoon steps down.
As part of the transition, MM Prop Consultancy, a firm owned by Murray that has provided services to Frasers, will receive £20.9million to terminate any agreements between the two companies and avoid a conflict of interest.