Arctic Cat Roaring 20% after Suzuki Motor Share Purchase
Shares of Arctic Cat (NASDAQ: ACAT) are trading over 20% higher this morning, after the company announced a cash buyback of 6.1 million Class B shares of Suzuki Motors for $79.3 million. This represents a discount of 30% and investors are taking notice.
The stock buyback reduces Arctic Cat's outstanding shares from 18.4 million to 12.3 million, increasing non-Suzuki shareholders' ownership of outstanding common shares by approximately 33%, and leaves Arctic Cat's public share float unchanged.
Arctic Cat funded this purchase with existing cash on its balance sheet. The company expects to end its 2012 fiscal year with more than $60 million in cash and no debt, after deducting cash used for the share purchase from Suzuki.
Commenting on the event, Claude Jordan, Arctic Cat's president and chief executive officer said, “Based on our current cash position and ongoing cash generation, we feel comfortable with this share purchase and believe it provides great value to our remaining shareholders. Suzuki has been a major shareholder since 1988 and a valued engine supplier for the Arctic Cat brand since 1976."
Currently, shares of Arctic Cat are trading over 20.3% higher at $22.85.
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