Ford to Repurchase $1.8B in Stock to Offset Share Dilution

By | May 08, 2014
To help offset share dilution, Ford's board of directors has approved a program to repurchase around 116 million shares of its common stock, and with each stock priced at roughly $15.46, the company will be dumping $1.8 billion into the repurchase of the shares. Not only will this help the stocks themselves, but it will also enhance shareholder returns. "These actions are consistent with our overall capital strategy to take anti-dilutive actions and position ourselves to further reduce Automotive debt. The strength of our cash generation gives us confidence to take these actions to enhance shareholder returns. With these actions, we will reduce our diluted shares by about 3 percent," said Bob Shanks, executive vice president and CFO. Of those 116 million shares, about 103 million will be repurchased to offset potential conversions of its 4.25 percent Senior Convertile Notes that are due Nobember 15, 2016. However, starting this November, the automaker will be able to terminate holders' conversion rights, giving the holders 30 days to convert their shares. Ford will also have the right to settle conversions with shares, cash, or a combination of both. This program has already begun, and all 116 million shares will be purchased through the open market through the rest of the year. There is no set number of shares that Ford needs to repurchase, and the program may be suspended at any time. Source: Ford