Media giant Thomson Reuters (Reuters) announced plans to buy back $1 billion worth of shares this Friday. The announcement follows on the heels of a statement issued by the company last month that declared it would be buying back $500 million shares.
The $1 billion buyback program announced today would be separate from the one announced last month, meaning the firm plans to repurchase a total of $1.5 billion worth of shares. Since last month’s announcement, the firm has already repurchased $231 million worth of shares.
The buyback program is a result of Reuters selling its Financial & Risk business to private equity firm Blackstone Group. The deal took place in January of this year and saw Blackstone paying $20 billion for a 55 percent stake in the business.
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As a result of this deal, Reuters has considered engaging in a $9-10 billion substantial issuer bid/tender offer (SIB). This offer would be available to all of Reuters’ shareholders.
Shares at a premium
The firm’s main shareholder, the private holding company Woodbridge, would be taking part in the SIB on a pro rata basis. Significantly, Reuters noted that, under the buyback program, there is a chance shares will be repurchased at a premium to the then-current market price of its shares.
Perhaps as a result of this, the company wants to reduce the size of the planned SIB. Shares repurchased via the buyback program would be bought by Reuters at market rate and not at a premium.
The repurchasing of shares under the buyback program will take place on either the New York Stock Exchange or the Toronto Stock Exchange. As Reuters is headquartered in Canada, the program will have to take place under the auspices of Normal-Course Issuer Bid (NCIB) regulation.