Adobe to repurchase stock worth USD 2 billion by 2015
Adobe eyes to take advantage of repurchasing shares at a guaranteed discount to the Volume Weighted Average Price
“We currently have authority granted by our Board of Directors to repurchase up to USD 2 billion in common stock through the end of fiscal 2015,” Adobe said in a filing with the US Securities and Exchange Commission (SEC).
The stock repurchase program is similar to its previous USD 1.6 billion stock repurchase program, which the firm exhausted during the second quarter of fiscal 2012, it added.
The US based firm follows December-November fiscal year. The company said it has entered into structured stock repurchase agreements with large financial institutions for the purchase of equity.
“The USD 700 million pre-payments during the nine months ended August 30, 2013, were under the new USD 2 billion stock repurchase authority, while the USD 305 million pre-payments during the nine months ended August 31, 2012, were under the previous USD 1.6 billion authority,” it added.
On the reasons for entering the agreements, Adobe said, “We enter into these agreements in order to take advantage of repurchasing shares at a guaranteed discount to the Volume Weighted Average Price (VWAP) of our common stock over a specified period of time,” it said.
“We only enter into such transactions when the discount that we receive is higher than the foregone return on our cash prepayments to the financial institutions. There were no explicit commissions or fees on these structured repurchases,” it further said.
The firm repurchased about 13.7 million shares at an average price of USD 43.78 through structured repurchase agreements in fiscal 2012 and the nine months ended August 30, 2013. The company’s stock yesterday closed at USD 50.82 apiece. During the nine months ended August 31, 2012, it had repurchased about 9.5 million shares at an average price of USD 32.17 through structured repurchase agreements.
“Subsequent to August 30, 2013, as part of our USD 2 billion stock repurchase program, we entered into a structured stock repurchase agreement with a large financial institution, whereupon we provided them with a prepayment of USD 400 million,” Adobe said in the filing.