A program by which a company buys back its own shares from the marketplace, thereby reducing the number of outstanding shares. Often chosen when management believes shares are undervalued or as a defense against unwanted takeovers. In many cases a share repurchase will increase the share price of the remaining outstanding shares as a result of a higher earnings per share. In this case, this type of distribution effectively distributes cash to shareholders in the form of capital gains rather than dividends. Share repurchases may be accomplished via a tender offer, open-market repurchase or targeted share repurchase. A tender offer may be fixed price (company specifies the maximum number of shares it will purchase, the fixed price at which it will buy the shares, and the offer expiration date) or Dutch Auction (company specifies a range of prices at which it is willing to purchase shares and shareholders decide the price within the range they’ll accept, with the actual purchase price for all shares determined as the minimum price sufficient to buy the specified number of shares). In an open market repurchase, the firm seeks to anonymously buy shares periodically in the secondary market. In a targeted share repurchase, the company seeks to buy back the shares of a particular shareholder or group of shareholders.