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The Globe and Mail

Share buybacks still hot for blue chip firms

With boatloads of cash sitting in the bank but economic uncertainty all around, blue chip Canadian firms continue to buy back shares at a rapid pace.

Although these share repurchases aren't exactly novel, you don't often see so many of Canada's most venerable names all buying back stock at such a rigorous pace.

Plus, the activity is spread across many industries.

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Some examples: last year, repurchased almost 20 million shares by doling out about $1.4-billion; Rogers Communications bought back 31 million shares at an average price of $35.53, costing the firm almost $1.1-billion; Tim Hortons Inc. repurchased about $430-million worth of common shares; and since 2010, Domtar Corp. has bought back over $500-million in shares.

Despite this success, these companies want to do even more. Rogers just instituted a new normal course issuer bid, allowing management to spend another billion on buybacks over the next year, Tim Hortons has announced plans to repurchase another $200-million in shares, and last fall CN announced its plan to buy back another 4 per cent of its public float.

So while critics argue that too many firms are sitting on cash for no good reason, these firms can at least point to these buybacks as examples of doing something. Whether or not buybacks are a good way to reward shareholders is still up for debate.

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About the Author
Reporter and Streetwise columnist

Tim Kiladze is a business reporter with The Globe and Mail. Before crossing over to journalism, he worked in equity capital markets at National Bank Financial and in fixed-income sales and trading at RBC Dominion Securities. Tim graduated from Columbia University's Graduate School of Journalism and also earned a Bachelor in Commerce in finance from McGill University. More

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