Ann: Westpac announces $3.5 billion off-market share buy-back, page-365

I agree that the buyback would have made a lot more sense when the price was $25-26.00+, and in hindsight an on market buyback probably would have been better received overall.

At $22.69 it is still very attractive to those who don’t pay tax or have capital gains they want to flush out at the lower discount (not at 14% though as you have pointed out). However, unless the share price rises we may find that this is not as oversubscribed as one would normally expect even at the lowest discount tier.

Remember that the dividend component is effectively $1.42 for every dollar of dividend once you count the franking credit, so unless the current price falls further you are still looking at close to $24.50 per share if you sell into the buyback at the 8% discount range - Which is great if you won’t need to pay tax, but diabolical for others who will.

The bright side is that we should see a nice share price bump once it is completed as many of those who sell out buy back in on market afterward.

That being said, and ignoring the buyback (which is a positive due to reduction in shares issued) this is a good buy given the great cashflow and excellent improvement prospect over the next two years.