What is an accelerated share repurchase (ASR) agreement?

An accelerated share repurchase (ASR) is a transaction where a company buys back its own stock from an investment bank (in this case, Goldman Sachs). The company usually receives a significant portion of the shares upfront, and the final number of shares repurchased is determined later based on market prices.

Why is Pfizer repurchasing its shares?

Pfizer is repurchasing its shares as part of a previously authorized program. This action typically signals that management believes the company's stock is undervalued, and it aims to return capital to shareholders and potentially increase earnings per share by reducing the number of outstanding shares.

When will the repurchase be finalized?

The initial delivery of approximately 150 million shares is expected on February 11, 2015. The full settlement of the $5 billion agreement is expected to occur by the third quarter of 2015.

What is the impact on Pfizer's stock price?

Share repurchases generally tend to support or increase a company's stock price by reducing the supply of shares and increasing demand. However, the ultimate impact depends on various market factors and investor sentiment.

PFE 8-K SEC Disclosure — Feb 10, 2015

Summary

Pfizer Inc. (PFE) announced on February 9, 2015, that it has entered into an accelerated share repurchase agreement with Goldman, Sachs & Co. to buy back $5 billion of its own common stock. This strategic move is consistent with Pfizer's previously authorized share repurchase program and indicates management's confidence in the company's valuation and future prospects. Approximately 150 million shares are expected to be received by Pfizer on February 11, 2015. The final settlement, anticipated by the third quarter of 2015, will adjust the total repurchase based on the volume-weighted average stock price during the term. This action aims to return value to shareholders, potentially increasing earnings per share by reducing the outstanding share count.

Key Highlights

1Pfizer entered into a $5 billion accelerated share repurchase (ASR) agreement.
2The ASR agreement is with Goldman, Sachs & Co.
3Approximately 150 million shares are expected to be delivered on February 11, 2015.
4The ASR program is in line with a previously announced share repurchase authorization.
5Final settlement is expected by the third quarter of 2015.
6The final number of shares repurchased will be subject to adjustments based on the volume-weighted average stock price.

PFIZER INC 8-K Report, Corporate Update (Feb 10, 2015)

Summary

Key Highlights

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