Summary
American Express Company (AXP) announced on June 1, 2009, that it entered into an underwriting agreement to issue and sell approximately 19.8 million shares of its common stock at a price of $25.25 per share. This offering is intended to raise capital for the company, likely to strengthen its balance sheet and provide liquidity during a challenging economic period. The company also granted the underwriters an option to purchase an additional nearly 3 million shares, indicating potential for further capital infusion. This stock issuance represents a significant capital-raising event for AXP. Investors should note that while raising capital can be a positive step towards financial stability, it also results in the dilution of existing shareholders' ownership. The price of $25.25 per share suggests the market's valuation of the company at that time, and the underwriters' decision to exercise their option will be an important indicator of demand and sentiment for AXP's stock.
Key Highlights
- 1AXP entered into an underwriting agreement on June 1, 2009, to sell common stock.
- 2The company will issue approximately 19.8 million shares of common stock.
- 3The offering price is set at $25.25 per share.
- 4Underwriters have a 30-day option to purchase an additional 2.97 million shares.
- 5The issuance is made under a Prospectus Supplement to a previous Form S-3 registration statement.
- 6Goldman, Sachs & Co. is acting as the representative of the underwriters.