BME: The Companies In The IBEX 35 Reduced Their Treasury Stock 7.2% In 2017

• The companies’ treasury stock totalled 3.5 billion euros, accounting for 0.62% of their stock capital and 6 billion if the amortisations are added 

The companies that make up the IBEX 35 index reduced their treasury stock by 7.2% in 2017. At the end of the year, these held 3.5 billion euros in own shares, that is, 0.62% of their capital. This figure reaches 6 billion if the value of amortisations made during the year is factored in, according to a report produced by BME’s Research Department with data from records published by the Spanish stock market supervisor, CNMV, and audited corporate accounts.

18 out of the 29 IBEX 35 companies that held treasury stock as of December 2017 reduced it. Of the 11 remaining ones, 7 increased it, 2 maintained it, 1 went on to have treasury stock and one (Siemens Gamesa) did not exist as such in 2016.

ACS, Ferrovial, Iberdrola and IAG reduced capital by amortising their own shares. IAG used this method to increase its shareholders’ share of the profits. Iberdrola and Abertis bought their own shares to give them to their shareholders (scrip issue). Ferrovial and ACS, on their part, bought treasury shares to amortise them and reduce capital in order to make up for the dilution effect of their programs under this remuneration formula.

Another reason for the purchase and sale of own shares by companies is to improve the stock’s liquidity in the market and its orderly trading. At the end of 2017 Cellnex and Colonial held liquidity agreements for the management of their treasury stock. This formula – relied upon by 16 companies of the IBEX 35 - is also used for the remuneration of the managers, directors and employees.

Lastly, companies also trade with their own shares using them as consideration in corporate transactions. Such was the case with Colonial, which sold its own shares to finance its bid for Axiare.

Percentage of capital

Only in 7 companies the treasury stock represented more than 1% of their share capital, among which Abertis stands out, with 7.96%. The maximum such level among listed companies in Spain is 10%.