Repurchase

To buy back something previously sold, especially shares, bonds, or other assets. This action is often undertaken by a company or individual for various strategic reasons, including bolstering investor confidence, signaling undervaluation, consolidating ownership, or fulfilling contractual obligations. Repurchases can be implemented through open market transactions, tender offers, or privately negotiated deals. The act necessitates the seller reacquiring the assets, involving a financial transaction where the buyer provides consideration, and the seller transfers the ownership rights back to the buyer. The reason for the repurchase is significant, as it can alter the balance sheet, debt, equity ratios and overall financial performance. The process typically involves a public announcement, defining the terms of the buyback.

Repurchase meaning with examples

• The tech giant announced a significant share repurchase program, aiming to boost its stock price. Analysts believed this demonstrated confidence in the company's future prospects and financial stability. The company would repurchase its shares on the open market, showing shareholders that the business believed the shares were undervalued and that profits would soon increase.
• Following a decline in bond yields, the government decided to repurchase a portion of its outstanding debt. This was done to manage the national debt, control interest rates, and stimulate economic growth. The government hoped to improve market conditions by creating more attractive financial products and to ensure more liquid funding.
• The struggling retailer was forced to repurchase unsold inventory from its franchised stores to maintain brand image. The decision to repurchase and handle the unsold products was made to prevent price wars and store closures, to keep the brand reputation intact. The repurchase came at a cost, but it protected their brand's image and business.
• Under the terms of the licensing agreement, the software company had the option to repurchase the distribution rights. They initiated the repurchase, which would give them greater control over the distribution and marketing of its core products and the ability to control pricing and distribution.