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. Typically, the company pays an amount to a financial institution, which then immediately repurchases shares on the open market. The company often receives a portion of the shares upfront, with the final number of shares repurchased determined later based on a formula, usually tied to the average market price of the shares during the ASR period.

Why would Synopsys undertake a $200 million share repurchase program?

Companies undertake share repurchases for several reasons, including returning excess cash to shareholders, signaling confidence in the company's future prospects and undervaluation of its stock, and increasing earnings per share (EPS) by reducing the number of outstanding shares. For Synopsys, this $200 million program indicates a belief that its stock is an attractive investment and a desire to enhance shareholder value.

How does this ASR program affect my investment in Synopsys?

A share repurchase program like this can positively impact your investment. By reducing the number of outstanding shares, the company's earnings per share (EPS) can increase, assuming net income remains constant. It also signals management's confidence, which can support the stock price. Additionally, as an existing shareholder, your proportional ownership of the company increases.

When will the share repurchases under the ASR agreements be completed?

The filing does not specify an exact completion date for the ASR program. However, ASR agreements are generally executed over a period of a few weeks to several months, with the final settlement occurring after the initial repurchase period. The press release attached as Exhibit 99.1 would likely contain more specific details on the expected timeline or pricing structure.

SNPS 8-K SEC Disclosure

Summary

Synopsys, Inc. (SNPS) announced on December 7, 2017, its entry into accelerated share repurchase (ASR) agreements totaling $200 million. This significant capital return initiative signals management's confidence in the company's financial health and its stock valuation. The ASR program allows Synopsys to repurchase a substantial amount of its common stock, which can be accretive to earnings per share by reducing the number of outstanding shares. Investors should view this as a positive signal of the company's commitment to enhancing shareholder value. The use of ASR agreements indicates an efficient method for executing a large share buyback program, potentially benefiting existing shareholders through increased ownership percentage and a potential boost in stock price. The filing also confirms the press release detailing this ASR as an exhibit.

Key Highlights

1Synopsys entered into accelerated share repurchase (ASR) agreements on December 7, 2017.
2The total value of the ASR agreements is $200 million.
3The ASR agreements were entered into with JPMorgan Chase Bank, National Association and MUFG Securities EMEA plc.
4The purpose of the ASR is to repurchase Synopsys stock.
5This action demonstrates a commitment to returning capital to shareholders.
6The company issued a press release detailing the ASR, which is attached as an exhibit.

SYNOPSYS INC 8-K Report, Corporate Update (Dec 7, 2017)

Summary

Key Highlights

Frequently Asked Questions