What is an accelerated share repurchase (ASR) agreement?

An accelerated share repurchase (ASR) agreement is a transaction where a company buys back its own stock from an investment bank (in this case, Goldman Sachs) at an agreed-upon price. It's a way for companies to return capital to shareholders by reducing the number of outstanding shares. NVIDIA is using this to efficiently repurchase a significant amount of its stock.

How much money is NVIDIA planning to return to shareholders?

NVIDIA has announced its intention to return $1 billion to shareholders in the current fiscal year. The ASR agreement is a mechanism to execute a portion of this shareholder return plan.

What is the initial impact of this agreement?

NVIDIA will pay $500 million to Goldman Sachs on February 20, 2014, and will receive an initial delivery of approximately 20,583,226 shares. This immediately reduces the number of outstanding shares and returns capital to investors who sell their shares as part of this buyback.

When will the full impact of the share repurchase be known?

The final number of shares repurchased will be determined at the settlement of the ASR agreement, expected by the end of July 2014. The final amount can be influenced by the average volume-weighted average prices of NVIDIA's common stock during the term of the agreement, meaning the exact number of shares might be adjusted.

NVDA 8-K: Material Agreements

Summary

NVIDIA Corporation has announced a significant step in its capital return program through an accelerated share repurchase (ASR) agreement with Goldman Sachs. This agreement, entered into on February 14, 2014, is a crucial component of NVIDIA's previously stated intention to return $1 billion to shareholders within the current fiscal year. The ASR program allows NVIDIA to repurchase a substantial number of its own shares efficiently, signaling confidence from management in the company's intrinsic value and a commitment to enhancing shareholder returns.

Key Highlights

1NVIDIA entered into an accelerated share repurchase (ASR) agreement with Goldman Sachs on February 14, 2014.
2This ASR agreement is part of NVIDIA's previously announced plan to return $1 billion to shareholders in the current fiscal year.
3NVIDIA will make an initial payment of $500 million to Goldman Sachs on February 20, 2014.
4Upon the initial payment, NVIDIA will receive an initial delivery of approximately 20.6 million shares of its common stock.
5The final number of shares repurchased will be determined at settlement, potentially involving adjustments based on NVIDIA's stock price.
6Final settlement of the ASR agreement is anticipated by the end of July 2014, though it could be accelerated by Goldman Sachs.

NVIDIA CORP 8-K Report, Material Agreement (Feb 14, 2014)

Summary

Key Highlights

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