Motorola Completes $4B Share Buyback, Plans More
Staff Reporter -- EDN, July 24, 2006
Communications giant Motorola Inc. is set to repurchase $1.2 billion of its common shares, completing the $4 billion share buyback program the company first announced in May 2005. The $4 billion program is first stock repurchase program in Motorola's history, the company said today in a statement.
Under the accelerated share repurchase agreement, Motorola will immediately pay $1.2 billion and will receive a substantial majority of the shares to be delivered under the agreement within three weeks. The specific number of shares to be repurchased is generally based on the volume weighted average share price of the company's common shares during the term of the accelerated repurchase agreement, subject to collar provisions that establish the minimum and maximum numbers of shares.
The company expects final delivery of any additional shares to occur in Q1 2007, although in certain circumstances the completion date may be shortened or extended, Motorola said. All of the repurchased shares will be retired.
Additionally, Motorola's board has authorized the buyback of up to an additional $4.5 billion of its outstanding shares of common stock over the next 36 months, subject to market conditions. Based on Motorola's current stock price, $4.5 billion represents approximately nine percent of the company's total market capitalization, Motorola said.
Under the new $4.5 billion share repurchase program, Motorola said it will repurchase shares from time to time for cash in open market transactions or in privately negotiated transactions in accordance with applicable federal securities laws. The timing and amount of the repurchases will be determined by the company's management based on its evaluation of market conditions, share price and other factors.
The share repurchase program may be suspended or discontinued at any time. As of July 1, Motorola had cash, cash equivalents and short-term investments of approximately $14.4 billion and had a net cash position of $10.1 billion, the company said.
"Motorola remains committed to providing growth and value for our stockholders. We have completed our first-ever share repurchase program almost two years ahead of schedule and we are immediately instituting a second share repurchase program," David Devonshire, Motorola's CFO, said in a statement.
"We believe that at current price levels, Motorola shares are an attractive investment and our recent repurchases highlight our continuing confidence in Motorola's long-term growth, Devonshire added. "With our strong balance sheet and significant free cash flow, we maintain the flexibility to invest in our current business, take advantage of strategic opportunities, and continue to repurchase our shares, pay dividends and further reduce debt."
