Alight Announces $75 Million Accelerated Share Repurchase Agreement
Alight, a cloud-based human capital technology provider, has announced a $75 million accelerated share repurchase agreement (ASR) with Barclays Bank PLC. This deal is part of Alight's existing share repurchase program, which had a remaining authority of $168 million as of June 14, 2024. Alight will make an initial payment of $75 million and receive shares worth 80% of this amount based on the closing share price on July 15, 2024. The final share count will be determined by the volume-weighted average price during the term, with the transaction expected to settle in Q3 2024. Alight can terminate the ASR before July 15, 2024.
CEO Stephan Scholl highlighted that the agreement reflects confidence in Alight's business and aligns with their goal of enhancing shareholder value through strategic operations and improved cash flow.
- Accelerated share repurchase agreement worth $75 million.
- Part of the larger share repurchase program with $168 million remaining authority.
- Initial share delivery worth 80% of the $75 million prepayment.
- Expected final settlement in Q3 2024.
- Option to terminate ASR before July 15, 2024.
- Indication of strong business confidence from CEO Stephan Scholl.
- Mention of growing revenue under contract.
- Expected value from selling the Professional Services segment and Payroll & HCM Outsourcing businesses.
- Commitment to return capital to shareholders.
- Immediate cash outflow of $75 million.
- Dependence on volume-weighted average price for final share count could result in fewer shares repurchased if stock price increases.
- Potential risk if business performance does not meet expectations, affecting stock price.
Insights
The announcement of an accelerated share repurchase agreement (ASR) by Alight is significant for investors. An ASR typically indicates management's confidence in the company's future performance. By repurchasing
For retail investors, this move suggests that Alight is financially sound and has surplus capital to return to shareholders. However, it's essential to consider the broader implications. Share repurchases can sometimes be used to artificially inflate stock prices or mask underlying financial issues. Given that Alight has recently agreed to sell its Professional Services segment and Payroll & HCM Outsourcing businesses, investors should watch for any potential impacts on revenue and profitability.
In the short term, the ASR might provide a boost to the stock price. Long-term implications will depend on the company's ability to sustain its profitability and cash flow generation post-divestiture.
From a market perspective, Alight's ASR is an interesting strategic move. Share repurchases often signal that the company believes its stock is undervalued. This can be appealing to investors who are looking for companies that are confident in their growth prospects. The anticipated final settlement in the third quarter of 2024 will provide a clearer picture of the volume-weighted average price and its impact on the stock.
Additionally, the mention of growing revenue under contract and strategic divestitures suggests a focus on core business areas and improving operational efficiencies. It will be important to monitor how the market reacts to these divestitures and whether the remaining segments can drive the expected growth. Investors should keep an eye on quarterly earnings reports and any updates on revenue contracts to gauge the effectiveness of these strategic moves.
Legally, the terms of the ASR with Barclays Bank PLC are standard, but they do offer some interesting clauses. For instance, Alight has the option to terminate the agreement at any time before July 15, 2024. This clause provides flexibility, allowing the company to reconsider the repurchase if market conditions change or if a better use of capital emerges. The final settlement will depend on the volume-weighted average price, less a discount and subject to adjustments. This ensures that the company gets a fair deal even if stock prices fluctuate.
Investors should view this clause as a safeguard, indicating that Alight is taking a cautious yet strategic approach to capital management. It's a sign that the company is prepared for various market scenarios, which can be reassuring from a risk management perspective.
Under the terms of the ASR, Alight will make an initial payment of
"This accelerated share repurchase agreement reflects our high level of confidence in the business, bolstered by our growing revenue under contract and the value expected to be unlocked by the recent agreement to sell our Professional Services segment and Payroll & HCM Outsourcing businesses," said Stephan Scholl, Chief Executive Officer of Alight. "Strengthening profitability and cash flow generation enables us to return capital to shareholders more consistently and is in line with our commitment to execute strategic operational objectives while enhancing shareholder value."
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, statements regarding the sale of our Payroll and Professional Services business, including the likelihood of the consummation of the transaction, the expected time period to consummate the transaction, the anticipated benefits of the transaction, statements regarding the ASR and statements related to the expectations regarding the performance and outlook for Alight’s business, financial results, liquidity and capital resources. In some cases, these forward-looking statements can be identified by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties including, among others, risks related to declines in economic activity in the industries, markets, and regions our clients serve, including as a result of elevated interest rates or changes in monetary and fiscal policies, competition in our industry, risks related to our ability to consummate the agreement to sell our Payroll and Professional Services business, risks related to the performance of our information technology systems and networks, risks related to our ability to maintain the security and privacy of confidential and proprietary information, risks related to actions or proposals from activist stockholders, risks related to the ability to meet the contingent payment conditions of the seller note, and risks related to changes in regulation, including developments on the use of artificial intelligence and machine learning. Additional factors that could cause Alight’s results to differ materially from those described in the forward-looking statements can be found under the section entitled “Risk Factors” of Alight’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the "SEC") on February 29, 2024, as such factors may be updated from time to time in Alight's filings with the SEC, which are, or will be, accessible on the SEC's website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be considered along with other factors noted in this presentation and in Alight’s filings with the SEC. Alight undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.
About Alight Solutions
Alight is a leading cloud-based human capital technology and services provider that powers confident health, wealth and wellbeing decisions for 36 million people and dependents. Our Alight Worklife® platform combines data and analytics with a simple, seamless user experience. Supported by our global delivery capabilities, Alight Worklife is transforming the employee experience for people around the world. With personalized, data-driven health, wealth, pay and wellbeing insights, Alight brings people the security of better outcomes and peace of mind throughout life’s big moments and most important decisions. Learn how Alight unlocks growth for organizations of all sizes at alight.com.
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Investor Contact:
Jeremy Cohen
Investor.Relations@alight.com
Media Contact:
Mariana Fischbach
Mariana.Fischbach@alight.com
Source: Alight, Inc.
FAQ
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