What is an Accelerated Share Repurchase (ASR) agreement?

An ASR agreement is a transaction where a company buys back its own shares from an investment bank (in this case, Barclays Capital). The company usually pays the bank upfront, and in return, receives a substantial portion of the shares immediately. The final number of shares repurchased is typically determined by the average market price over a specified period, with potential adjustments based on the agreement's terms.

How does this ASR fit into ONEOK's overall capital allocation strategy?

This $300 million ASR is the initial component of a larger, three-year stock repurchase program authorized by ONEOK's Board of Directors, with a total authorization of up to $750 million. This indicates the company's intent to return capital to shareholders through share buybacks as part of its financial strategy.

What is the potential impact of the ASR on ONEOK's share count and earnings per share (EPS)?

By repurchasing shares, ONEOK will reduce the total number of its outstanding shares. This reduction, assuming net income remains constant or increases, generally leads to a higher earnings per share (EPS), which can be viewed favorably by investors. The exact impact will depend on the final number of shares repurchased.

When will the exact number of repurchased shares be determined?

The exact number of shares ONEOK will ultimately repurchase under the ASR agreement will be based on the volume-weighted average price of its common stock during the repurchase period, along with other potential adjustments and clauses outlined in the agreement with Barclays.

OKE 8-K: Material Agreements & Regulation FD

Summary

ONEOK, Inc. (OKE) announced on May 17, 2011, that it has entered into an accelerated share repurchase (ASR) agreement with Barclays Capital, marking the initial phase of its previously announced three-year, $750 million stock repurchase program authorized in October 2010. Under this ASR agreement, ONEOK committed to repurchasing $300 million of its common stock. The company made the $300 million payment on May 18, 2011, and received approximately 3.7 million shares from Barclays. The final number of shares repurchased will be determined by the volume-weighted average price during the repurchase period, with potential adjustments or additional share/cash deliveries based on the agreement's terms.

Key Highlights

1ONEOK entered into an Accelerated Share Repurchase (ASR) agreement with Barclays Capital on May 17, 2011.
2The ASR agreement is the first step in ONEOK's previously authorized three-year stock repurchase program.
3The total authorized stock repurchase program amounts to $750 million.
4The initial ASR agreement involves the repurchase of $300 million worth of ONEOK's common stock.
5ONEOK made a $300 million payment and received approximately 3.7 million shares on May 18, 2011.
6The final number of shares repurchased under the ASR is subject to volume-weighted average pricing and other potential adjustments.
7The company announced this ASR agreement on May 17, 2011, via a press release.

ONEOK INC /NEW/ 8-K Report, Material Agreement (May 19, 2011)

Summary

Key Highlights

Frequently Asked Questions