What is the total amount authorized for share repurchases?

CVS Caremark Corporation has authorized a new share repurchase program of up to $4.0 billion. This is in addition to their plan to complete a previously authorized $2.0 billion program.

What is an accelerated share repurchase (ASR) transaction?

An accelerated share repurchase (ASR) is a transaction where a company buys back its own stock from a financial institution (in this case, Barclays Bank PLC) for a fixed amount. The institution typically delivers a portion of the shares immediately, and the final number of shares repurchased is determined based on market prices over a specified period, often with a minimum and maximum number of shares. This allows the company to achieve its repurchase goals more quickly.

When will the repurchases under the new program occur?

The $1.0 billion ASR transaction with Barclays Bank PLC was entered into on August 24, 2011, and is expected to conclude in approximately four months. For the remaining $3.0 billion of the new program, the timing and amount of repurchases will depend on market conditions and other factors, with no assurance on specifics.

What is the significance of these share repurchases for investors?

These substantial share repurchase programs indicate that CVS management believes the company's stock is undervalued and is committed to returning capital to shareholders. Reducing the number of outstanding shares can also increase earnings per share (EPS), potentially leading to a higher stock price.

CVS 8-K: Material Agreements

Summary

CVS Health Corporation (CVS) announced a significant new share repurchase program, authorizing up to $4.0 billion in common stock repurchases. This new program is in addition to the company's intent to complete a previously authorized $2.0 billion repurchase program later in 2011. As an immediate action under the new program, CVS entered into an accelerated share repurchase (ASR) transaction with Barclays Bank PLC for $1.0 billion. This transaction will result in the immediate delivery of shares to CVS, with the final number of shares subject to market-based pricing and other terms. This aggressive capital return strategy indicates management's confidence in the company's financial health and its commitment to enhancing shareholder value.

Key Highlights

1CVS Caremark Corporation announced a new $4.0 billion share repurchase program.
2The company intends to complete its existing $2.0 billion repurchase program in 2011.
3An accelerated share repurchase (ASR) transaction of $1.0 billion was executed with Barclays Bank PLC.
4The ASR involves immediate initial delivery of shares, with final settlement based on average daily volume-weighted average price over the transaction term.
5The ASR transaction is expected to extend for approximately four months.
6The remaining $3.0 billion of the new repurchase program will be executed based on market conditions and other factors.
7The Board of Directors retains the right to modify, extend, or terminate the repurchase program at any time.

CVS HEALTH Corp 8-K Report, Material Agreement (Aug 30, 2011)

Summary

Key Highlights

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