Shares of Zhihu Inc. (NYSE:ZH, HKEX:2390), China's leading online content community, rallied over 5% in midday trading on Monday after the company announced a major share repurchase program.
Zhihu has commenced an all-cash tender offer to buy back up to 46.9 million of its Class A ordinary shares and American Depositary Shares (ADSs), representing a total value of approximately $54.8 million. The Beijing-based company will offer HK$9.11 (equivalent to $3.50) per Class A share or ADS, reflecting a premium of around 10% over the last closing price.
The buyback program, which requires shareholder approval at an extraordinary general meeting scheduled for October 16, underscores Zhihu's confidence in its long-term growth prospects. Share repurchases are often seen as a way for companies to return excess cash to shareholders while also boosting earnings per share and indicating that management views the stock as undervalued.
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