A company buys back stock because distributing dividends incurs a 30% withholding tax.

Sorry guys but this is why I dont want to see many finance related posts here, because very few know what they are talking about.

Buybacks are the preferred method of RETURNING CASH to shareholders, because dividends historically have been sticky. Buybacks are flexible.

Buybacks are also done to optimise the debt ratio, to minimise the firms cost of capital and thereby maximizing firm value.