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- ASX 200-listed contractor CIMIC Group (CIM) has had its biggest shareholder buy up 4.3 million new shares today
- Hochtief Australia, a local arm of a German construction giant, now owns just over 74 per cent of CIMIC
- The new shares were bought a day after CIMIC shares tanked and fell 31 per cent, despite no new company news
- The buy-up seems to be a vote of confidence for CIMIC, and shareholders have taken well to the news
- Today, shares in CIMIC are up just under 50 per cent and worth $19.43 cents each
Industrial contracting giant CIMIC Group (CIM) shares have skyrocketed today after its biggest shareholder upped its stake in the company.
Investors were baffled yesterday when CIMIC shares were ravaged despite no company news. Shares in the company slumped over 31 per cent from $18.92 to $13 in just one day.
Today, however, CIMIC has taken back all of its lost ground. Shares are now almost 50 per cent green, but there is still little substantial news to support both the sell-off and the buy-up.
A potential cause for today’s sudden reversal, however, could be the 4.3 million new shares gobbled up by major shareholder Hochtief Australia, the local arm of a $5.7 billion German construction company.
With Hocthief’s bolstered interest, the construction company now owns almost three-quarters of CIMIC, with its official holding sitting at 74.13 per cent.
The investment seems to be a vote of confidence from the construction giant, with the major shareholder taking advantage of the sunken market prices to snap up some more shares.
This confidence echoes CIMIC’s own security in its balance sheet after the company announced it would be going ahead with a major share buyback less than two weeks ago.
The buyback was announced in mid-December, and, at the time, CIMIC told shareholders it was planning an on-market buyback of up to 10 per cent of company shares over 12 months.
Then on March 11, 2020, despite a tanking share price, CIMIC announced it the buyback was still in motion.
Thus, while the company is yet to share exactly how its business has been impacted by the COVID-19 pandemic so far, it seems both CIMIC and its biggest shareholder are certain the damage will not be too severe.
As the last hour of trade for the week approaches, CIMIC shares are up 49.46 per cent and trading for $19.43 each. The company has a $6.23 billion market cap.
