Cash Management

Buyback Fever Still Raging

Chevron, the most ambitious user of its own capital, disclosed a $5 billion repurchase plan to cover the next three years.
Stephen TaubDecember 8, 2005

Buyback mania just won’t quit. In the past week, several big companies disclosed plans to repurchase large blocks of their shares. A number of smaller businesses announced similarly large buybacks — large, at least, relative to company size.

By far the most ambitious user of its own capital is Chevron. The energy giant disclosed a $5 billion repurchase plan to cover the next three years, on the heels of buybacks totaling $5 billion under an earlier program initiated in April 2004. The company also announced a $14.8 billion capital and exploratory spending program for 2006, a 35 percent year-on-year increase.

Chevron is the latest among a growing number of companies to announce a buyback plan after issuing shares to complete a merger. Earlier this year Chevron paid a mix of stock and cash to buy Unocal for more than $17 billion.

Another company to launch a major buyback in recent days is drug giant Amgen. The company announced that its directors authorized additional common-stock repurchases of up to $5 billion; Amgen has $2 billion remaining under its previous program.

In a press release, the company citied “confidence in its long-term prospects” for the additional share-repurchase authorization.

Choice Hotels announced that it will double its buyback plan, to an additional 3 million shares of its outstanding common stock; it still has 2.1 million shares available under its current authorization. Choice, which has a market capitalization of $2.5 billion, has repurchased about 66.6 million shares since that earlier repurchase program was announced in June 1998.

“This increase in our share repurchase authorization gives us additional flexibility to take advantage of market conditions to further enhance shareholder value,” said president and chief executive officer Charles A. Ledsinger Jr., in a statement.

And Taubman Centers, which has a $1.77 billion market cap, announced that its board approved a $50 million stock buyback plan.