Reliance $2.1 bln share buyback to open Feb 1

Reliance Industries KG-D6's facility located in Andhra Pradesh is pictured in this undated handout photo.

MUMBAI (Reuters) - Reliance Industries (RELI.NS) will open its share buyback from February 1, and close the offer on January 19 next year, it said in an advertisement in the Times of India newspaper on Tuesday.

Reliance, India's biggest company by market value, said late last week it will spend up to $2.1 billion to buy back shares at a maximum price of 870 rupees each, or about 10 percent premium over its current share price, as it looks to prop up its underperforming shares.

It will buy back up to 120 million shares, or 3.7 percent of outstanding equity. Its controlling shareholders, who own 44.7 percent of the equity, will not participate in the offer.

Shares fell 2.7 percent on Monday after the energy major posted its first drop in quarterly profit in more than two years. By 0423 GMT on Tuesday, the stock was up 1.8 percent at 785.45 rupees .

Reliance's market value tumbled 35 percent in 2011, mainly because of worries that falling output from its offshore gas fields would hurt its long-term growth.

The stock underperformed the main Mumbai market, which fell nearly 25 percent in the same period.

The share buyback is expected to increase shareholder value by reducing the number of shares and increasing earnings per share, Reliance said in the advertisement.

This is the company's first share buyback since 2005 and the biggest ever in India.

Citigroup (C.N) and Bank of America-Merrill Lynch (BAC.N) are the managers for the buyback offer.

(Reporting by Prashant Mehra; Editing by Harish Nambiar)