Summary
Allstate Corp (ALL) announced on May 7, 2018, that it has entered into an accelerated share repurchase agreement (ASR) with JPMorgan Chase for $400 million of its outstanding common stock. This initiative is a significant component of the company's broader $2 billion share repurchase program initiated in August 2017. The majority of the shares under this ASR are expected to be delivered to Allstate at the agreement's inception, with JPMorgan Chase making market purchases to fulfill the remainder by August 6, 2018. The final cost per share and total number of shares repurchased will be determined based on the volume-weighted average prices during JPMorgan Chase's purchase period.
Key Highlights
- 1Allstate entered into a $400 million accelerated share repurchase (ASR) agreement.
- 2The ASR is part of a larger $2 billion share repurchase program announced in August 2017.
- 3The majority of shares under the ASR will be delivered to Allstate at the agreement's inception.
- 4JPMorgan Chase is expected to purchase shares in the market by August 6, 2018, to complete the repurchase.
- 5The final share price and quantity will be based on the volume-weighted average prices during the purchase period.
- 6As of May 4, 2018, Allstate had already repurchased $1.2 billion of its stock under the existing program, excluding this ASR.
- 7Shares acquired through the ASR will be held in treasury.
Frequently Asked Questions
An accelerated share repurchase (ASR) agreement is a contract where a company agrees to buy back a significant amount of its own stock from a financial institution, usually at a discount. The institution typically buys the shares in the open market and then delivers them to the company. ASRs allow companies to repurchase shares quickly and efficiently.
Share repurchases, like this ASR, are typically undertaken by companies to return capital to shareholders, potentially boost earnings per share (EPS) by reducing the number of outstanding shares, and signal confidence in the company's financial health and future prospects.
The final price per share and the total number of shares repurchased will be determined by the average of the daily volume-weighted average prices (VWAP) of Allstate's common stock during the period that JPMorgan Chase is purchasing shares in the market. This mechanism helps ensure a fair price based on market activity during the repurchase period.
Prior to this $400 million ASR, Allstate had already repurchased $1.2 billion of its common stock under the $2 billion program, with an additional 12.4 million shares bought as of May 4, 2018.