(Bloomberg) — BASF SE said it will buy back as much as 3 billion euros ($3.4 billion) of shares after profits swelled on the back of surging prices for the chemicals it produces.
The stock repurchase program will start this month and conclude by the end of next year, BASF said Tuesday in a statement. Europe’s biggest chemicals maker rose as much as 3.5% in Frankfurt trading.
Prices for BASF’s products like petrochemicals and polyamides surged last year, bolstering profits. The gains more than offset rising energy prices and weaker demand from the automotive sector, where the global chip crisis snarled production.
The buyback represents a “material positive” for shareholders, Jefferies analysts led by Chris Counihan said in a note, adding the move raises confidence the company will be able to reach its goal of increasing its dividend payout each year.
While companies in industries from health care to telecommunications are using excess cash to expand their portfolios in the wake of the pandemic — European dealmaking last month was on track for its best year since 2007 — BASF said acquisitions were “currently of lower relevance” for the company.
(Updates with analyst comment in fourth paragraph.)
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