What is an Accelerated Share Repurchase (ASR) agreement?

An Accelerated Share Repurchase (ASR) is an agreement between a company and an investment bank (underwriter) where the company buys back its own stock. The company pays the investment bank an agreed-upon amount, and the bank immediately buys a substantial number of shares on the open market for the company. The final number of shares repurchased is determined at a later date, often based on an average price over a period.

Why is S&P Global repurchasing its stock?

Companies typically repurchase stock when they believe their shares are undervalued, or when they have excess cash flow that they want to return to shareholders. It can also be a signal of management's confidence in the company's future prospects and ability to generate earnings.

How will this ASR impact S&P Global's financial metrics?

The repurchase of $500 million worth of stock will reduce the number of outstanding shares. This reduction, assuming net income remains constant or grows, will likely lead to an increase in Earnings Per Share (EPS), a key metric for investors.

When will the share repurchase be completed?

The company expects the final settlement of the accelerated share repurchase transaction to be completed no later than the first quarter of 2019.

SPGI 8-K SEC Disclosure

Summary

S&P Global Inc. (SPGI) announced on October 31, 2018, that it entered into an accelerated share repurchase (ASR) agreement to buy back $500 million of its common stock. This move is part of the company's ongoing share repurchase program, authorized in December 2013, which allows for the repurchase of up to 50 million shares. The ASR is expected to conclude by the first quarter of 2019. This substantial share repurchase signals management's confidence in the company's intrinsic value and its commitment to returning capital to shareholders. Investors should view this as a positive signal, indicating that the company believes its stock is undervalued or that it has excess cash flow available for deployment beyond organic growth and strategic investments. The completion of the ASR will reduce the number of outstanding shares, potentially boosting earnings per share (EPS) and enhancing shareholder value.

Key Highlights

1S&P Global Inc. entered into a $500 million Accelerated Share Repurchase (ASR) agreement.
2The ASR agreement is for the repurchase of outstanding common stock.
3The transaction is expected to be completed by the first quarter of 2019.
4This ASR is part of a previously announced share repurchase program authorized to buy back up to 50 million shares.
5The announcement reflects a commitment to returning capital to shareholders.
6The buyback may lead to an increase in Earnings Per Share (EPS).

S&P Global Inc. 8-K Report, Corporate Update (Nov 1, 2018)

Summary

Key Highlights

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