Under a provision granted by its supervisory board at the May 2019 annual general meeting, German specialty chemicals producer Lanxess is preparing to buy back outstanding shares equivalent to 10% of equity and potentially worth as much as €500 million.

The buyback, which will take place via the stock exchange over the coming 24 months, demonstrates management’s confidence in the strategic direction of Lanxess and will create value for shareholders, said CEO Matthias Zachert.

Plans call for a two-tranche transaction of €250 million each. The first tranche of the buyback is set to begin on Mar. 12 and is due to be completed within the next 12 months. Lanxess said the timing of the second tranche will be determined following completion of the first.

Based on the Mar. 9 price of €40.30 per share, the Cologne-based company said it could buy back roughly 8.74 million of its own shares for an aggregate consideration of about €352 million. The acquired shares would be redeemed.

Analysts at Baader called the buyback a better move for the chemical producer than additional acquisitions. The share rose 5.8% to €42.63 in same day trading in reaction to the Mar. 10 announcement.