Bed Bath & Beyond Enters $ 150 Million Fast Track Share Buy-Back Plan
Bed bath and beyond (NASDAQ: BBBY) will repurchase for $ 150 million of shares, or approximately 5 million shares, from JPMorgan Chase as part of an accelerated buyback program.
The housewares retailer previously authorized $ 825 million in share buybacks over the next three years, but said in its fiscal 2021 first quarter earnings report yesterday that it would make a total of $ 375 million in buybacks on an accelerated basis when or before the end of the current quarter on February 27.
As he had already finished $ 225 million in accelerated share buybacks in October, it was nearing the deadline with $ 150 million remaining. Once the buyout is complete, Bed Bath & Beyond will have $ 450 million on its buyout authorization.
Hurry up and wait
Under an accelerated buyback program, a company immediately buys back its shares from an investment bank, in this case JPMorgan, which borrows the shares it sells to them from the company. The financial institution then purchases these shares in the open market over time to liquidate its borrowings.
The advantage for the company is that it is able to withdraw these shares immediately, which reduces its number of shares at a faster rate, rather than if it hangs out for the duration of the buyback authorization, which can be canceled if trading conditions change for the worse.
Bed Bath & Beyond points out that at the time of final settlement, JPMorgan may in fact have to retailer more stock, or she could owe the bank more stock or even more money. The final settlement is expected to be finalized by February 27.
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