Software giant Adobe, which makes software such as Photoshop and Acrobat, will repurchase stock worth $2 billion by fiscal 2015.
“We currently have authority granted by our Board of Directors to repurchase up to $2 billion in common stock through the end of fiscal 2015,” Adobe said in a filing with the US Securities and Exchange Commission (SEC).
The stock repurchase programme is similar to its previous $1.6 billion stock repurchase programme, which the firm exhausted during the second quarter of fiscal 2012, it added.
The US-based firm follows December-November fiscal year.
The company said it has entered into structured stock repurchase agreements with large financial institutions for the purchase of equity.
“The $700 million pre-payments during the nine months ended August 30, 2013, were under the new $2 billion stock repurchase authority, while the $305 million pre-payments during the nine months ended August 31, 2012, were under the previous $1.6 billion authority,” it added.
On the reasons for entering the agreements, Adobe said: “We enter into these agreements in order to take advantage of repurchasing shares at a guaranteed discount to the Volume Weighted Average Price (VWAP) of our common stock over a specified period of time. We only enter into such transactions when the discount that we receive is higher than the foregone return on our cash prepayments to the financial institutions. There were no explicit commissions or fees on these structured repurchases.”
The firm repurchased about 13.7 million shares at an average price of $43.78 through structured repurchase agreements in fiscal 2012 and the nine months ended August 30, 2013. The company’s stock on Monday closed at $50.82 apiece.
During the nine months ended August 31, 2012, it had repurchased about 9.5 million shares at an average price of $32.17 through structured repurchase agreements.
“Subsequent to August 30, 2013, as part of our $2 billion stock repurchase programme, we entered into a structured stock repurchase agreement with a large financial institution, whereupon we provided them with a prepayment of $400 million,” Adobe said in the filing.
The firm further said upon the completion of the $400 million stock repurchase agreement, $800 million remains under the firm’s current authority.