Dairy cooperative Fonterra is to buy back up to $50 million worth of its own shares because the price is too low.
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"The co-op considers the prevailing price particularly since late April has undervalued Fonterra shares, which is a key reason for announcing this buy-back," chair Peter McBride said in a letter to shareholders.
He said the decision had been taken after considering Fonterra's strategy and its overall business performance.
"We also consider the merits of a buy-back alongside other investment opportunities we have in the pipeline. These have a range of risk and return profiles, but overall we believe there is room in our portfolio of investments for buying back shares at a price that we consider to be undervalued."
It has also set aside up to $300m to support liquidity in the farmers-only sharemarket through a different buyback scheme or other measures.
A share buyback reduces the number of shares on issue and consequently the value of those remaining.
Fonterra is in the midst of a capital restructuring, which has just received government backing but needs a law change to come into effect, to make it easier for farmers to join the co-operative.
However, the government imposed conditions for its support including more official scrutiny in the setting of milk prices and outside management of trading in Fonterra's shares and units.
The co-op's shares hit a lifetime low of $2.20 each last month and have halved in value over the past year, reducing the value of the asset on individual farmers' balance sheets.
