Ferguson plc: Share Repurchase Program
Ferguson announces the continuation of its $4.0 billion share repurchase program. A new non-discretionary agreement with J.P. Morgan Securities will oversee the repurchase of up to $235 million in shares from June 10, 2024, to September 26, 2024. This arrangement is part of a broader initiative authorized by shareholders to buy back up to 20,398,372 ordinary shares. The repurchased shares will be transferred into treasury, reducing the company's capital. Following a merger effective August 1, 2024, Ferguson Enterprises Inc. will assume the repurchase program's obligations. Purchases will be executed on the NYSE in compliance with regulatory requirements.
- Continuation of $4.0 billion share repurchase program.
- Non-discretionary agreement with J.P. Morgan ensures independent trading decisions.
- Share repurchase aims to reduce company's capital, potentially increasing shareholder value.
- Program authorized by shareholders to repurchase up to 20,398,372 shares.
- Shares repurchased will be transferred into treasury, possibly used for share awards in the future.
- Post-merger, Ferguson Enterprises Inc. will continue the repurchase program.
- Maximum amount allocated for this tranche is to $235 million.
- Potential risks associated with the merger and transition to Ferguson Enterprises Inc.
- Regulatory compliance and limits might restrict the repurchase process.
- Program only reduces capital if shares are not used for other purposes like share awards.
Insights
Ferguson plc's share repurchase program signals a confidence in the company's valuation and financial health. Share repurchases typically reduce the number of outstanding shares, which can increase earnings per share (EPS) and potentially the stock price. This move often suggests the company believes its shares are undervalued.
The allocation of
Additionally, the mechanics of the buyback, managed by JPMS, ensure compliance with regulatory frameworks such as the Market Abuse Regulation and Rule 10b5-1, protecting investors' interests by adhering to transparent and fair trading practices.
However, while repurchases may positively affect EPS, they do not inherently improve underlying business fundamentals. Retail investors should weigh the potential short-term benefits against the long-term strategic direction of the company.
From a market perspective, Ferguson's buyback program can create a positive sentiment among investors as it often indicates management's belief in the company's prospects. The program can also provide price support in volatile markets, potentially reducing downside risk for shareholders.
It's important to consider the timing of the buyback, as it coincides with a major structural change - the merger with Ferguson Enterprises Inc. This merger could create synergies, improving operational efficiencies and market positioning. However, it adds a layer of complexity since the new parent company, FEI, will take over the buyback responsibilities.
Retail investors should monitor how the merger impacts both the integration process and the strategic use of repurchased shares, particularly if these are intended to satisfy share awards, which can dilute the effectiveness of the buyback program in reducing outstanding shares.
WOKINGHAM,
The maximum pecuniary amount allocated to this tranche of the Program is
The Company's shareholders generally authorized the Company to purchase up to a maximum of 20,398,372 of its ordinary shares at its Annual General Meeting held on November 28, 2023. Pursuant to such authority, the Company intends to continue purchasing shares under the Program. The aggregate number of shares acquired under such authority by the Company pursuant to the Program shall not exceed the maximum number of shares which the Company is authorized to purchase pursuant to such general authority. It is intended that any shares repurchased by the Company under the Program will be transferred into treasury.
The purpose of the Program is to reduce the capital of the Company. To the extent required, the Company may in the future use the repurchased shares to satisfy share awards. Any purchases of shares by the Company in relation to this tranche of the Program will be carried out on the New York Stock Exchange (in accordance with the terms of the arrangement entered into with JPMS) and in accordance with (and subject to the limits prescribed by) the Company's general authority to repurchase shares granted by its shareholders, the Market Abuse Regulation 596/2014 (as it forms part of
In accordance with the terms of the Company’s previously announced merger (the “Merger”), it is expected that as of 12:01 a.m. Eastern Time (5:01 a.m.
About Ferguson plc
Ferguson plc (NYSE: FERG; LSE: FERG) is a leading value-added distributor in
Cautionary note regarding forward-looking statements
Certain information in this announcement is forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995, including with relation to the Program and its purpose and timetable and the Merger. Forward-looking statements cover all matters which are not historical facts and speak only as of the date on which they are made. Forward-looking statements can be identified by the use of forward-looking terminology such as "will," "intend," “may,” or other variations or comparable terminology. Many factors could cause actual results to differ materially from those in such forward-looking statements, including, but not limited to: the Merger may be delayed, cancelled, suspended or terminated; the conditions to the completion of the Merger may not be satisfied; weakness in the economy, market trends, uncertainty and other conditions in the markets in which we operate, and other factors beyond our control, including disruption in the financial markets and any macroeconomic or other consequences of political unrest, disputes or war; failure to rapidly identify or effectively respond to direct and/or end customers' wants, expectations or trends, including costs and potential problems associated with new or upgraded information technology systems or our ability to timely deploy new omni-channel capabilities; unsuccessful execution of our operational strategies; adverse impacts caused by a public health crisis; and other risks and uncertainties set forth under the heading "Risk Factors" in our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (“SEC”) on June 5, 2024, our Annual Report on Form 10-K filed with the SEC on September 26, 2023, and in other filings we make with the SEC in the future. Forward-looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Other than in accordance with our legal or regulatory obligations we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
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Source: Ferguson plc
FAQ
What is the value of Ferguson's latest share repurchase tranche?
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What is the total authorized amount for Ferguson's share repurchase program?
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