What is an accelerated share repurchase (ASR) agreement?

An accelerated share repurchase (ASR) agreement is a transaction where a company buys back a substantial amount of its own stock from a financial institution (like Mizuho Markets Americas LLC in this case) at an accelerated pace. The company typically pays the institution upfront, and the institution then buys shares on the open market. The final number of shares retired is usually determined at a later date based on the average price paid by the institution during the ASR period.

Why would Synopsys repurchase its own stock?

Companies repurchase their own stock for several reasons, including returning capital to shareholders, signaling confidence in the company's undervaluation, increasing earnings per share (EPS) by reducing the number of outstanding shares, and potentially offsetting dilution from stock-based compensation.

What does this $100 million share repurchase mean for Synopsys's stock price?

A significant share repurchase program like this can be supportive of a company's stock price. The demand created by the buyback can help offset selling pressure, and the signal of management confidence can attract investor interest. However, the ultimate impact on the stock price also depends on broader market conditions and the company's ongoing business performance.

When will the full impact of the $100 million repurchase be reflected?

The announcement on April 5, 2021, signifies the agreement has been made. The actual repurchase of shares will occur over a period defined by the ASR agreement, and the final settlement, where the exact number of shares is determined and exchanged, will happen after that period concludes. Information regarding the number of shares repurchased will be disclosed in subsequent filings.

SNPS 8-K SEC Disclosure

Summary

Synopsys, Inc. (SNPS) announced on April 5, 2021, that it has entered into an accelerated share repurchase (ASR) agreement with Mizuho Markets Americas LLC to buy back $100 million of its own stock. This significant capital allocation decision signals management's confidence in the company's value and future prospects. The ASR program allows for the immediate repurchase of shares, with the final number of shares repurchased determined over a period based on the average purchase price. Investors should view this ASR as a positive indicator of Synopsys's commitment to returning capital to shareholders and potentially supporting its stock price. While the exact number of shares will depend on market conditions, the $100 million commitment demonstrates a substantial belief by the company in its intrinsic value. Further details will likely be disclosed in subsequent filings as the repurchase program is executed.

Key Highlights

1Synopsys entered into an accelerated share repurchase (ASR) agreement for $100 million.
2The ASR agreement was made with Mizuho Markets Americas LLC.
3The event date for this disclosure was March 31, 2021, with the filing on April 4, 2021, and announcement on April 5, 2021.
4This action indicates management's confidence in the company's stock valuation.
5The ASR is a mechanism to return capital to shareholders.
6The final number of shares repurchased will be determined by the market price over the repurchase period.

SYNOPSYS INC 8-K Report, Corporate Update (Apr 5, 2021)

Summary

Key Highlights

Frequently Asked Questions