What is an Accelerated Share Repurchase (ASR) agreement?

An Accelerated Share Repurchase (ASR) agreement is a transaction where a company buys back its own stock from an investment bank. The company typically pays the bank upfront and receives an initial delivery of shares. The final number of shares repurchased is then determined later, based on the average market price of the stock over a specified period, potentially with some adjustments.

Why is Cigna entering into these ASR agreements?

Cigna is entering into these ASR agreements as part of its ongoing share repurchase program. These buybacks are intended to return capital to shareholders by reducing the number of outstanding shares, which can potentially increase earnings per share (EPS) and enhance shareholder value.

What is the impact of the ASR on Cigna's stock price?

The immediate impact of announcing a large share repurchase program like this can be positive, as it signals management's confidence and reduces the supply of shares. However, the final number of shares repurchased will depend on the stock's trading price, so the ultimate dilution reduction will vary.

When will the final number of repurchased shares be determined?

The final number of shares that Cigna will ultimately repurchase will be determined based on the volume-weighted average price of Cigna's common stock during the terms of the transactions, less a discount and subject to adjustments. Final settlement is expected to occur during the second quarter of 2024.

CI 8-K SEC Disclosure — Feb 15, 2024

Summary

The Cigna Group (CI) announced on February 14, 2024, that it has entered into accelerated share repurchase (ASR) agreements totaling $3.2 billion with Deutsche Bank AG and Bank of America, N.A. This significant capital allocation reflects the company's commitment to returning value to shareholders. Under these agreements, Cigna will initially receive approximately 7.6 million shares, with the final number of shares repurchased determined by the volume-weighted average stock price over the agreement period, less a discount. This move is part of Cigna's ongoing share repurchase program and aims to reduce the outstanding share count, potentially boosting earnings per share. Investors should note that final settlement is expected in the second quarter of 2024, and the exact number of shares repurchased is subject to market conditions and potential adjustments. The company has also issued a press release on February 15, 2024, detailing this transaction.

Key Highlights

1Cigna Group entered into $3.2 billion in Accelerated Share Repurchase (ASR) agreements.
2The agreements are with Deutsche Bank AG and Bank of America, N.A.
3This ASR is part of the company's existing share repurchase program.
4Cigna will initially receive approximately 7.6 million shares on February 15, 2024.
5The final number of shares repurchased will be based on the volume-weighted average stock price during the ASR term, subject to a discount and adjustments.
6Final settlement of the ASR agreements is expected to occur in the second quarter of 2024.

Cigna Group 8-K Report, Corporate Update (Feb 15, 2024)

Summary

Key Highlights

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