Capital Markets

Amex Leads Parade of Buybacks

A number of companies are apparently flush with cash, thanks in part to recent sales of assets or business units; the market's recent sell-off seem...
Stephen TaubMay 23, 2006

At least seven companies have announced stock buybacks in the past few days, but apparently not for the usual reasons.

None suggested that it was repurchasing shares to avoid dilution following recent stock-option exercises. The stock market’s recent sell-off also seems to play little or no part. A number of the companies, however, are apparently flush with cash, thanks in part to recent sales of assets or business units.

American Express, which last year spun off its Ameriprise wealth unit and sold its tax-services business, earlier this week announced plans to repurchase up to 200 million common shares, representing about 16 percent of common shares outstanding. The company also boosted its dividend by 25 percent.

“The dividend increase and repurchase program reflect the underlying momentum in our business,” said chairman and chief executive officer Kenneth I. Chenault, in a statement. “We believe they will be an effective way of delivering value to our shareholders.”

The company’s share price has remained virtually unchanged during the market’s sell-off.

BankAtlantic Bancorp announced that its board approved the repurchase of up to 6 million shares of Class A common stock, which accounts for about 10 percent of the total of its Class A and Class B common stock outstanding.

The company did not cite a reason for the buyback. Last month, however, it announced plans to take public its Ryan Beck Holdings subsidiary. At the time, BankAtlantic stated that the purpose of the offering was to monetize a portion of its investment in Ryan Beck through payment to BankAtlantic of a special dividend funded by a portion of the net proceeds.

In general, BankAtlantic’s stock is virtually unchanged since the market began its recent descent.

Upscale retailer Nordstrom announced that its board authorized a $1 billion share repurchase program, noting that its prior $500 million authorization was completed during the first quarter. “This share repurchase program reflects the continued confidence the board has in our business and our ongoing commitment to return value to shareholders,” said president Blake Nordstrom, in a statement.

Nordstrom’s share price, to be sure, is down about 13 percent this month.

VeriSign, a provider of infrastructure services for the Internet and telecommunications networks, announced a new $1 billion stock repurchase program. A portion of the repurchased shares may be used for the company’s employee benefit plans, it stated; the balance will be available for other general corporate purposes.

“Strong cash flow across our businesses has allowed us to repurchase over $600 million of VeriSign common stock over the last 12 months,” said chairman and chief executive officer Stratton Sclavos, in a statement. “We expect these cash-flow trends to continue for the foreseeable future, and the board of directors believes that this expanded repurchase program will drive further shareholder value.”

The stock is only down about a buck during the market’s sell-off.

Other recently announced buybacks:

Tempur-Pedic International, a manufacturer of mattresses and pillows, announced that its board of directors boosted its share repurchase program by $40 million, to a total of $220 million.

Check Point Software Technologies, a maker of Internet security software, announced that its board authorized the repurchase of up to an additional $600 million of its stock, funded from available working capital.

Getty Images, a stock-photography archive, announced that its board approved an increase to its share repurchase program of $100 million, to a total of $250 million. As a result, the company will sell certain short-term investments, resulting in a non-recurring, pre-tax charge of roughly $4 million in the second quarter.