AmerisourceBergen Announces New Special Share Repurchase Program to Further Enable Execution of Warrant Hedging Strategy

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AmerisourceBergen Corporation
ABC
today announced that its Board of Directors has authorized a special $2.4 billion share repurchase program intended to further enable the execution of the Company's previously announced warrant hedging strategy. The new special program will be used to further mitigate the dilutive effect on the ownership interests of stockholders that may result from the issuance of common stock upon exercise of the warrants issued in March 2013. The Company recently completed the April 2015 $1.0 billion special share repurchase program, and had previously completed the May 2014 $650 million special share repurchase program. The Company expects that the new $2.4 billion program should be sufficient to offset the remaining share dilution from future warrant exercises, with approximately $140 million expected to be used in connection with call options expiring in October 2015, approximately $700 million expected to be used in connection with capped calls expiring in 2016, and approximately $715 million expected to be used in connection with capped calls expiring in 2017. The remainder available under the new special program would be used for discretionary repurchases intended to supplement these hedging activities. "We are very pleased that we have recently made significant progress towards further offsetting the expected impact from warrant exercises in 2017, after having essentially fully covered the expected impact from the 2016 warrants during our June 2015 quarter," said Steven H. Collis, AmerisourceBergen President and Chief Executive Officer. "With our cash flow generation, we have tremendous flexibility to mitigate the remaining impact of the warrants either through share repurchases, hedging activities, or strategic acquisitions." Share repurchases under the new special program will be funded by proceeds from the warrant exercises, and by cash on hand. Share repurchases under the special program are expected to take place in the open market as well as by other means, such as through the exercise of the call options or capped calls that the Company has previously entered into, or other contracts we may enter into in the future. The share repurchases are expected to occur over an extended period of time, subject to market conditions. As previously disclosed, the Company intends to continue to exclude the impact of the share repurchases under its special programs from the presentation of adjusted diluted earnings per share from continuing operations until the warrants are exercised or expire. The exclusion of the special share repurchases is consistent with the Company's exclusion of the accounting dilution resulting from the impact of the warrants in the calculation of the Company's adjusted diluted earnings per share. As a result, share repurchases under the special programs will not have an impact on the Company's expectations for the range of its adjusted diluted earnings per share from continuing operations for fiscal 2015 or fiscal 2016, which were both previously disclosed in its earnings release dated July 23, 2015. The adjusted earnings per share guidance from continuing operations continues to include an assumption that the Company will repurchase $300 million of its common stock in fiscal 2015 and $300 million in fiscal 2016 under its previously announced regular share repurchase programs, subject to market conditions. As previously disclosed, subsidiaries of Walgreens Boots Alliance, Inc. were collectively issued warrants to purchase up to 22,696,912 shares of the Company's common stock at an exercise price of $51.50 per share exercisable during a six month period beginning in March 2016 and warrants to purchase up to 22,696,912 shares of the Company's common stock at an exercise price of $52.50 per share exercisable during a six-month period beginning in March 2017.
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