8-KOther Events

GLOBAL PAYMENTS INC 8-K Report, Corporate Update (Oct 10, 2013)

Filed October 10, 2013For Securities:GPN

Summary

Global Payments Inc. (GPN) announced on October 7, 2013, that it has entered into an accelerated share repurchase (ASR) program with Goldman, Sachs & Co. valued at $100 million. This ASR is a significant capital allocation decision by the company, signaling confidence in its stock and a commitment to returning value to shareholders. The repurchase program is part of a larger, previously authorized initiative to buy back up to $250 million of the company's common stock. Investors should note that the final number of shares repurchased will be determined by the volume-weighted average price during the ASR period, which is expected to conclude by January 9, 2014. This move suggests management believes the company's stock is undervalued or that they are seeking to offset potential dilution from stock-based compensation. The substantial amount allocated to the buyback underscores a strategic focus on enhancing shareholder value through share count reduction.

Key Highlights

  • 1Global Payments Inc. entered into a $100 million Accelerated Share Repurchase (ASR) program with Goldman, Sachs & Co.
  • 2The ASR is part of a larger Board-authorized program to repurchase up to $250 million of the Company's common stock.
  • 3The repurchase aims to reduce the number of outstanding shares and potentially increase earnings per share.
  • 4The final number of shares repurchased will be based on the volume-weighted average price of the Company's common stock during the ASR period.
  • 5The ASR program is expected to be completed no later than January 9, 2014.
  • 6This action indicates management's confidence in the company's stock and its future prospects.

Frequently Asked Questions

An Accelerated Share Repurchase (ASR) program is an agreement between a company and an investment bank (like Goldman, Sachs & Co. in this case) to repurchase a specified amount of the company's stock. The company typically pays the investment bank an agreed-upon amount, and the bank immediately buys back shares on the open market. The company then receives the shares from the investment bank at a later date, with the exact number of shares based on the average price paid over the ASR period.

Companies typically repurchase their stock when they believe their shares are undervalued, to offset dilution from stock options or grants, or to return excess cash to shareholders. For Global Payments, this $100 million ASR, part of a larger $250 million authorization, suggests management's confidence in the company's financial health and stock valuation, and a strategy to enhance shareholder value by reducing the number of outstanding shares.

The repurchase of shares can potentially increase your ownership stake proportionally in the company. By reducing the number of outstanding shares, it can also lead to an increase in earnings per share (EPS), which may positively impact the stock price over time. The final impact will depend on the average price at which the shares are repurchased and the overall market conditions.

Global Payments anticipates that all repurchases under this specific $100 million ASR program will be completed no later than January 9, 2014.