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Nissan surges as much as 12% on share buyback announcement
[TOKYO] Nissan shares surged as much as 12 per cent at the start of trade on Monday as investors cheered the company's announcement to buy back shares.
Japan's number two automaker said after the Tokyo market closed on Friday that it would purchase up to 400 billion yen (S$4.93 billion) worth of its own shares by the end of the year.
In response, Nissan's Tokyo-listed shares soared the most in seven years, according to Bloomberg, with the stock trading at 1,091.5 yen shortly after the start of trade Monday.
The buyback, announced after a board meeting, will start on Monday and run until Dec 22, it said.
Share buybacks tend to lift the value of existing stock.
The buyback will not lead to any "material change" in the shareholding balance in Nissan's alliance with French partner Renault, it added.
Separately, Renault said that it would sell Nissan shares as part of the programme to maintain its current 43.4 per cent stake in Nissan, which in turn owns 15 per cent in the French automaker.
Renault shares closed more than five per cent higher on the Paris exchange Friday, which was open at the time of the announcement.
Renault-Nissan alliance chief executive Carlos Ghosn said the decision to return cash to shareholders was prompted by the group's strong cash flow position.
"Returns to shareholders is one of Nissan's key objectives," he said in a statement.
Renault-Nissan is the world's fourth-biggest car maker with 8.53 million unit sales in 2015.