What is an Accelerated Share Repurchase (ASR) program?

An Accelerated Share Repurchase (ASR) is an agreement where a company buys back its own shares from an investment bank (in this case, Merrill Lynch). The company pays a fixed amount upfront, and the investment bank buys the shares. There's typically a price adjustment later based on the average market price during the ASR period, which Aflac can settle in cash or stock.

Why is Aflac repurchasing its shares?

Aflac is repurchasing these shares as part of its previously announced share repurchase authorizations, which are approved by its board of directors. Share repurchases can return value to shareholders by reducing the number of outstanding shares, potentially increasing earnings per share.

What is the financial impact of this ASR program?

Aflac is spending approximately $757 million in cash for this repurchase. The exact final cost will be determined by the volume-weighted average price of its shares during the ASR period, with a potential adjustment. This reduces the number of outstanding shares held by the public.

When will the ASR program be fully completed?

The ASR program is expected to be completed and settled during the second quarter of 2008. However, Merrill Lynch has the option to settle the program earlier.

AFL 8-K: Material Agreements

Summary

Aflac Incorporated announced on February 4, 2008, its entry into an accelerated share repurchase (ASR) agreement with Merrill Lynch for approximately $757 million. This transaction involves the repurchase of 12.5 million shares of Aflac's common stock at an average price of $60.58 per share, utilizing internal capital. These repurchased shares are intended to be held in treasury and are part of the company's existing share repurchase authorizations. The ASR program is structured to allow Merrill Lynch to buy shares in the open market, with a potential price adjustment at settlement based on the volume-weighted average price (VWAP) during the ASR period. Aflac has the option to settle this adjustment in cash or stock. The program is expected to be completed and settled in the second quarter of 2008, though early settlement is possible.

Key Highlights

1Aflac entered into an Accelerated Share Repurchase (ASR) agreement on February 4, 2008.
2The ASR program involves the repurchase of 12.5 million shares of Aflac common stock.
3The total purchase price for the ASR program is approximately $757 million.
4The repurchase price per share was $60.58.
5The ASR program is funded by Aflac's internal capital.
6The repurchase is part of previously authorized share repurchase programs.
7Settlement and completion of the ASR program are expected in the second quarter of 2008, with potential for early settlement.

AFLAC INC 8-K Report, Material Agreement (Feb 6, 2008)

Summary

Key Highlights

Frequently Asked Questions