Summary
Dover Corporation (DOV) announced a significant capital allocation initiative on May 22, 2018, through an Accelerated Share Repurchase (ASR) agreement with Goldman Sachs & Co. LLC. The company will repurchase $700 million of its common stock, funded by proceeds from the recent spin-off of Apergy Corporation. This move underscores Dover's commitment to returning capital to shareholders and optimizing its capital structure.
Key Highlights
- 1Dover Corporation entered into an Accelerated Share Repurchase (ASR) agreement for $700 million.
- 2The ASR program is funded by proceeds received from the Apergy Corporation spin-off transaction.
- 3The company expects to receive an initial delivery of approximately 7.08 million shares on May 24, 2018.
- 4The total number of shares repurchased will be determined based on the volume-weighted average share price during the calculation period, less a discount.
- 5The ASR program is part of a broader authorization to repurchase up to 20 million shares approved by the board in February 2018.
- 6The ASR program is expected to be completed in 2018, with terms allowing for potential adjustments to the completion timeline.
- 7The agreement with Goldman Sachs outlines customary terms for ASR programs, including share delivery mechanisms and termination provisions.
Frequently Asked Questions
An Accelerated Share Repurchase (ASR) is an agreement where a company buys back its own stock from an investment bank (like Goldman Sachs in this case). The company pays a set amount upfront, and the investment bank delivers a substantial portion of the shares immediately. The final number of shares repurchased is determined later based on the stock's market performance over a specified period, often with a discount applied.
Dover is conducting this ASR program as a way to return capital to its shareholders and potentially enhance shareholder value. The program is funded by proceeds from the Apergy Corporation spin-off, indicating a strategic use of newly available capital.
The ASR program will reduce the number of Dover's outstanding common shares. An initial delivery of approximately 7.08 million shares is expected, and the final number will be determined upon completion of the program, leading to a net reduction in the float.
The ASR program is scheduled to be completed in 2018. However, the exact completion date can be adjusted based on the terms outlined in the ASR agreement with Goldman Sachs.