Accelerated Stock Repurchase Agreement

April 7, 2021 11:47 pm Published by Leave your thoughts

Point 703 of the S-K regulation stipulates that, for all share repurchases, the company must provide the following information in the form of tables: according to RSA`s agreements, Intel receives an initial share delivery of approximately 166 million shares, with final settlement to be made by the end of 2020. The final number of shares repurchased by Intel will be based on Intel`s volume-weighted average common share price over the life of the agreements, net of a discount and subject to adjustments. Share repurchase programs increase the company`s earnings per share and also boost share prices. In addition to the increase in earnings per share, the repurchase program reduces the value of balance sheet assets. As a result, shareholder funds, return on investment and return on equity increase, as the balance sheet must remain balanced. Most of the time, buyback programs are aimed at short-sighted investors. “We reached a record high in the first half of 2020 and increased our outlook for the full year as customers depend on Intel technology to provide critical services and enable people to work, learn and stay connected. As continued data growth fuels demand for Intel products for processing, exercise and storage, we are confident in our multi-year plan to deliver top-not only products,” said Bob Swan, CEO of Intel. “While the macroeconomic environment remains uncertain, Intel`s shares are currently listed well below our intrinsic valuation, and we believe these buybacks are currently prudent.” In the case of an accelerated takeover, the company buys its shares from an investment bank and the investment bank in turn borrows shares from the company`s clients.

Investment banks are paid in cash by the company to buy shares on the open market. Since the investment bank sold the stock to the company to return the shares to its customers, they buy the shares on the open market. At the end of the transaction, the company ends up receiving more shares than originally. While the return on accelerated buybacks is positive, they are even less scalable than traditional buyback operations on the open market. The snapshot above shows that United Technologies has entered into an “accelerated buyout” agreement with two banks (Deutsche Bank AG – J.P.Morgan Chase) for $6 billion worth of shares. Is accelerated repurchase different from free market share buybacks? The statements contained in this press release regarding future plans and expectations, including RSA agreements, the settlement of such agreements, Intel`s share repurchases and Intel`s business prospects, are forward-looking statements that involve a number of risks and uncertainties. Words such as “expected,” “expected,” “intention,” “goals,” “plans,” “thinks,” “seeks,” “seeks,” “appreciates,” “may,” “would,” “should,” “could,” “could,” “could,” and variations in these similar words and expressions must identify these forward-looking statements. Statements based on uncertain estimates, forecasts, forecasts, events or assumptions, including statements about future products and technologies and the expected availability and usefulness of these products and technologies, market opportunities, our valuation, our ability to invest and restore capital, and expected trends in our companies or markets that also identify them with forward-looking statements. These statements are based on management`s current expectations and involve numerous risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such forward-looking statements.

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