Yes from the point of view of the company it is returning capital to shareholders as a class because when they authorise their broker to buyback shares in the market, usually within certain parameters as regards price, that is what they are doing. However unless it is a tender offer the chances of any one individual shareholder getting the price authorised is at best a 'maybe' because you are simply instructing a sale and do not know who the buyer is nor I imagine do you care as long as you get what seems an acceptable price.
Agreed; we are talking about maybe 2% (spread, costs) of 5% (buyback quantum), so and individual shareholder "loses" maybe 0.1% of her return by selling in the market and not participating directly in a tender offer. Given buybacks are only one of a number of ways of having your capital returned the loss is even smaller over all time and all capital. So it's not really a point I worry about.
I do not know why shareholders get so uptight about this subject. As we have said, it is likely that Aviva will use a share buyback because apart from anything else they will want to reduce the number of shares in issue
I don't think that is the purpose -- unless you mean that they thereby reduce the capital held by the company. The number of shares is not an important metric is it? But yeah, I see very little economic difference between share buybacks and the other two legal methods of returning capital, dividends and capital reduction. [Unless the market has the share price radically wrong, but then individual shareholders can figure that out and take their own action -- this share-price argument always works against those trying to advance it.]
and that is the easy way to do that. It helps continuing shareholders because it leaves less mouths to feed and may help dividend paid per share.
I wouldn't say it helps continuing shareholders. I'd say it's neutral to them. The company has less capital and its value is also less, but the company has fewer shares in issue and each holder retains a larger proportion of the smaller company so their future cashflows will be proportionately larger.
You only have to look at Phoenix Holdings to see the opposite effect, issuing large numbers of shares to fund acquisitions notwithstanding that the acquired companies have apparently been earnings accretive from the start. They have held their dividend for a long while and in fact reduced it at one point.
Not familiar with Phoenix so will take your word for it.