WEX Inc. (NYSE: WEX), a Portland-based financial technology provider, will buy back $300 million of its own stock shares via an accelerated repurchase agreement with JPMorgan Chase Bank.
The agreement is covered by WEX’s existing $1.05 billion amended share repurchase authorization, announced in February.
“Entering into this [accelerated share repurchase] reflects our confidence and belief in WEX’s intrinsic value and long-term growth potential, underpinned by our strong revenue and earnings growth profile and our expectations for our future cash generation,” said WEX Chair, CEO and President Melissa Smith, in a July 29 news release.
“We remain committed to our capital allocation strategy, which allows us to invest in our future growth while simultaneously driving additional value to our shareholders through opportunistic share repurchases,” she added.
Share repurchase steps
Under the agreement, WEX will make an initial payment of $300 million to JPMorgan for 1.3 million shares of WEX’s common stock. That’s 80% of the total number of shares WEX expects to repurchase under the agreement.
The price is based on the $180.44 Wall Street close on July 26.
WEX shares closed at $174.89 on Wednesday, Aug. 14, giving the stock a market value of around $7.2 billion. The stock is trading 7.3% lower than a year ago.
For WEX, the final number of shares to be repurchased under the accelerated accord will be based on the average of the daily volume-weighted average prices of WEX’s common stock during the term of the agreement, minus a discount and subject to customary adjustments.
The final settlement of the share buyback is expected to be completed in the fourth quarter, subject to acceleration at JPMorgan’s discretion. As of July 19, 2024, WEX had around 41.1 million common shares outstanding, according to the company.
In its latest results report, WEX posted second-quarter earnings that beat Wall Street estimates but the company scaled back its full-year financial forecast.