Hit by stock decline, A&B is spending $71.5M on buybacks
Alexander & Baldwin Inc., acknowledging the recent weakness of its stock, is repurchasing about $71.5 million of its common shares.
The Honolulu-based company, whose business is comprised of ocean shipper Matson Navigation Co., real estate and agriculture, said under an agreement reached with Goldman, Sachs & Co. that it is acquiring $63 million, or a minimum of 1.345 million shares, of its own common stock. The deal calls for A&B to pay a maximum of $46.83 a share and a minimum of $41.20 a share. A&B already has acquired 984,000 of the 1.345 million shares, with the remaining 361,000 shares to be acquired tomorrow.
A&B can acquire up to an additional 184,000 shares with the remaining portion of the $63 million if the shares are at the lower end of the price-per-share range. A&B also said it spent $8.5 million to buy 200,000 shares on the open market in late June.
"We've responded to the recent softness in A&B's stock price to make an attractive investment and return cash to our shareholders," said A&B's chairman and chief executive, Allen Doane. "We are confident in our ability to take this step while maintaining access to capital to fund our business growth strategies and our active capital investment program."
A&B's stock, which fell 26 percent from an all-time high of $55.40 on Dec. 22 to $41.15 on June 27, has been rebounding since then and closed yesterday at $43.06.
The company said with the completion of its accelerated repurchase program that it will have bought between 1.545 million and 1.729 million shares of its stock this year and will have between 271,000 and 455,000 shares remaining under its existing share repurchase authorization.
A&B, scheduled to report its second-quarter earnings on July 28, said the 984,000 shares it has acquired so far under the repurchase program and the 200,000 shares obtained through the open market have been retired but will have "a negligible impact" on second-quarter earnings per share because the purchases occurred at the end of the quarter.
Chris Benjamin, A&B's senior vice president, chief financial officer and treasurer, said the reduced number of outstanding shares "will have more of an impact" in the third quarter.
"A share repurchase is, first and foremost, an investment decision, but it also is an important means of optimizing the company's balance sheet and cost of capital," Benjamin said.
Benjamin said A&B doesn't comment on stock activity and couldn't address why the shares had sold off from the end of last year.
"The only thing I can say is if you look at companies in the various industries we participate in, there's been softness in all of those industries," he said.