What is an Accelerated Share Repurchase (ASR)?

An Accelerated Share Repurchase (ASR) is a transaction where a company agrees to buy back a significant amount of its own stock directly from a financial institution, like Credit Suisse in this case. It typically involves an upfront repurchase and a subsequent adjustment period to determine the final price, providing an efficient way for companies to execute large buyback programs.

Why is Capital One repurchasing its stock?

Capital One is repurchasing its stock as part of a broader strategy to return capital to shareholders and potentially enhance shareholder value. Stock repurchases can reduce the number of outstanding shares, which may lead to an increase in earnings per share (EPS) and signal management's confidence in the company's future prospects.

How will the final cost of the share repurchase be determined?

The initial purchase price is set at the closing price of Capital One's common stock on April 2, 2007. However, the final cost will be subject to adjustments based on the daily volume-weighted average market price of the stock over the subsequent four to five months. These adjustments, paid or received in shares, will ensure the effective repurchase price reflects market conditions over that period.

What is the total amount authorized for stock repurchases?

The $1.5 billion ASR is part of a larger $3.0 billion stock repurchase program that Capital One announced on January 25, 2007. This indicates the company's intention to return a substantial amount of capital to shareholders through buybacks.

CAPITAL ONE FINANCIAL CORP 8-K: Regulation FD

Summary

Capital One Financial Corporation (COF) announced on March 12, 2007, that it has entered into a $1.5 billion accelerated share repurchase (ASR) agreement with Credit Suisse, New York Branch. This ASR is part of the company's previously announced $3.0 billion stock repurchase program initiated on January 25, 2007. The transaction aims to reduce outstanding shares, potentially increasing shareholder value and earnings per share. The ASR agreement specifies that Capital One will repurchase its common stock at the closing price on April 2, 2007. Notably, the final cost may be adjusted based on the average trading price of the stock over the following four to five months, with adjustments settled in shares. This structure allows for efficient execution of a significant repurchase program while managing potential price volatility.

Key Highlights

1Capital One entered into a $1.5 billion Accelerated Share Repurchase (ASR) agreement.
2The ASR is part of a larger $3.0 billion stock repurchase program announced earlier.
3The ASR agreement was made with Credit Suisse, New York Branch.
4The initial purchase price will be based on the closing price of COF common stock on April 2, 2007.
5The final settlement may involve a purchase price adjustment based on the average daily volume-weighted market price over approximately 4-5 months.
6Price adjustments will be settled in shares of Capital One common stock.
7The transaction is structured to comply with relevant Securities Exchange Act rules, including Rule 10b-18.

CAPITAL ONE FINANCIAL CORP 8-K Report, Regulation FD Disclosure (Mar 12, 2007)

Summary

Key Highlights

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