After last week when we discussed its latest partnership with Warner Music, Tencent is again in the spotlight. This time, the entertainment group announced its plans to buy back up to $1 billion worth of shares. The repurchase program is set to start Monday, March 2021 and is scheduled to unfold during the next twelve months.
Tencent Music, part of the Tencent conglomerate, lost nearly a third of its value on Thursday amid a sell-off in Chinese tech stocks after the US Security and Exchange Commission adopted a law named the Holding Foreign Companies Accountable Act. Under the law, US regulators will audit certain companies. They have to submit certain documents to establish that they are not owned or controlled by a governmental entity in a foreign jurisdiction. The respective companies will have to name each board member who is an official of the Chinese Communist Party. Moreover, the US regulator could stop the trading of securities if rules are broken.
The program is considered to represent the Board’s confidence in the company’s long-term outlook and strategy.
“We believe it will ultimately benefit TME (Tencent Music Entertainment) and create value for its shareholders,” stated Tong Tao Sang, Board’s chairman. The company will repurchase Class A ordinary shares in the form of American depositary shares.
Following the news, Tencent stock price fell 1.28%.
Read more about the partnership between Tencent Music and Warner here!
Sources: finance.yahoo.com, cnbc.com