The board of Bajaj Auto on Monday announced a Rs 4,000-crore share buyback at a price of Rs 10,000 per share. The repurchase price is at a massive premium of 43 per cent to the closing price of the two-wheeler firm on the BSE on Monday.

Announcing the plan after market hours, the Pune-based firm said its board has approved a proposal to buy back 4,000,000 shares representing 1.41 per cent of the total number of equity shares of the company at a price of Rs 10,000 per share, payable in cash for a total consideration not exceeding Rs 4,000 crore.

“This, it said, excludes transaction costs such as brokerage, filing fees, advisers/ legal fees, public announcement publication expenses, printing and dispatch expenses, applicable taxes such as buyback tax, securities transaction tax, goods and services tax, stamp duty),” the firm said.

Bajaj Auto added the buyback represents 16.33 per cent and 14.49 per cent of the total paid-up equity share capital and free reserves (including securities premium account) according to the audited standalone and consolidated financial statements for the financial year ended March 31, respectively.

The share repurchase will be done through the tender offer route.

Market circles said shares of Bajaj Auto are likely to stage a sharp rally on Tuesday given the price at which they will be bought back. It is not clear if the promoters will participate in the programme.

While the promoters hold nearly 55 per cent of the company, the rest is held by domestic institutions such as mutual funds, insurance companies and banks, Indian public and foreign portfolio investors.

In a buyback, a company acquires its own shares from the market or from shareholders, which are subsequently extinguished.