The AbbVie Inc (NYSE:ABBV) board of directors has given the authorization required to increase $5 billion to the company’s existing share buyback program. With the authorization, the management of the biopharmaceutical firm will now repurchase the shares at a time of their own choosing and they will not be tied to a specific period.
The management of the company can also choose to discontinue the program at any time. Repurchasing of the shares can be done either in private transactions or in the open market.
This is not the first time that AbbVie Inc (NYSE:ABBV) is undertaking a stock repurchase. Mid-last year the company signed a deal with JPMorgan Chase & Co. (NYSE:JPM) in a $3.8 billion share buyback deal. This was an accelerated program which required the investment bank to deliver a bulk of the shares within a short period of time. With regards to the quantity of shares, this was to be determined by average prices. These prices were to be weighted based on volume and after discounts and other deductions had been made. The final date of the settlement transaction was set as the close of 2016’s Q4 or earlier depending on the schedule set out by JPMorgan Chase.
In 2015 AbbVie Inc (NYSE:ABBV) also entered into a similar deal with Morgan Stanley (NYSE:MS) in which common stock worth about $5 billion was to be repurchased. Similar to the JPMorgan Chase deal, a bulk of the shares were to be repurchased within a short period of time. The agreement also stipulated that additional shares were to be delivered by Morgan Stanley upon AbbVie’s request.
As in the case of JPMorgan Chase, the quantity of shares that was to be bought back was to based on the average price calculated daily and weighted based on volume. Some of the deductions to be made included a discount and other amounts that had been agreed upon in the share repurchase agreement. The conclusion of the deal was set as the end of quarter four of 2015 or earlier depending on the judgment of the investment bank.
On Friday, shares of AbbVie Inc (NYSE:ABBV) rose by 0.47% to close the day at $61.77.
Note: This article is written by Adam Russell and originally published at Market Exclusive.