Third-party logistics company, C.H. Robinson Worldwide, Inc. (CHRW - Analyst Report) has announced an increase in its share repurchase program by 15 million shares. This represents approximately 9.4% of the company’s outstanding shares as of Aug 23, 2013.
This is the second repurchase program of C.H. Robinson in a year, after the company increased its buyback of shares by 10 million shares in Aug 2012. The company still has 8.7 million shares left with the previous share repurchase authorization. Including the current number of shares authorised for share repurchase, the total stands at 23.7 million.
Out of the total share repurchase value, $500 million will be an Accelerated Share Repurchase (ASR) Program with JP Morgan Chase Bank National Association and Morgan Stanley & Co. LLC. Initially, C.H. Robinson will receive 6,118,882 shares while the final number of shares will be determined at the completion of the ASR program.
The share price will be calculated on the weighted average price of company’s common stock during the ASR term minus an agreed discount. The ASR term is expected to be 4-7 months.
Apart from share repurchase, the company is also borrowing $500 million from prudential, New York Life and Metlife in a private placement transaction. The average maturity age of the debt is 15 years and weighted average coupon rate is 4.28%. The new debt will expand the company’s leverage position.
C.H. Robinson has a rich history of enhancing shareholders’ wealth. Apart from share repurchase, the company has continuously paid dividends to shareholders for over 25 years. C.H. Robinson’s stock price declined around 6.5% post its second-quarter financial results, where the company’s earnings failed to meet the Zacks Consensus Estimate.
Currently, C.H. Robinson holds a Zacks Rank #4 (Sell). Other stocks worth considering in this sector include P.A.M Transportation Services Inc. Swift Transportation Co. (SWFT - Snapshot Report) and Con-Way Inc. . Both PTSI and SWFT currently carry a Zacks Rank #1 (Strong Buy) while CNW holds a Zacks Rank #2 (Buy).