Summary
Intel Corporation announced on August 19, 2020, its intention to enter into accelerated share repurchase (ASR) agreements totaling $10 billion. This move is a significant step in resuming its previously planned $20 billion share repurchase program, which was initially announced in October 2019 and temporarily suspended in March 2020 due to the COVID-19 pandemic. The company's management believes its stock is currently trading below its intrinsic valuation, making these repurchases a prudent use of its strong balance sheet resources. The ASR agreements involve an initial delivery of approximately 166 million shares on August 21, 2020, with the final number of repurchased shares determined by the volume-weighted average stock price over the agreement term, less a discount. Intel expects to fund these repurchases using existing cash reserves, with final settlement anticipated by the end of 2020. Following the completion of these ASRs, Intel will have repurchased roughly $17.6 billion of its stock as part of the $20 billion program, with plans to complete the remaining $2.4 billion when market conditions stabilize and return to historical capital return practices.
Key Highlights
- 1Intel is initiating $10 billion in accelerated share repurchase (ASR) agreements.
- 2This action resumes the previously announced $20 billion share repurchase program, which was suspended in March 2020.
- 3Management believes Intel's stock is undervalued, justifying the repurchases.
- 4The company's strong balance sheet supports this significant capital return.
- 5Initial share deliveries are expected on August 21, 2020, with final settlement by year-end 2020.
- 6Repurchases are funded by existing cash resources.
- 7Approximately $17.6 billion of the $20 billion program will be completed with these ASRs, with the remainder planned for a later date.