AT&T Inc. (NYSE:T) unveiled Monday a repurchase of up to 300 million shares, worth about $10.5 billion, equivalent to about 6% of the company’s outstanding shares.
The fresh board authorization is in addition to three other 300 million share repurchase authorizations approved by the board of directors in December 2010, July 2012 and March 2013.
ValueWalk's Raul Panganiban interviews Kirk Du Plessis, Founder and CEO of Option Alpha, and discuss Option Alpha and his general approach to investing. Q1 2021 hedge fund letters, conferences and more The following is a computer generated transcript and may contain some errors. Interview with Option Alpha's Kirk Du Plessis
Vodafone takeover rumor
Rumors have been circulating that AT&T Inc. (NYSE:T) was planning a takeover of Vodafone Group Plc (NASDAQ:VOD) (LON:VOD) for some time. As a result of those rumors shares of Vodafone rose before they fell nearly 3% in January after AT&T filed its statement with the U.K.’s Panel on Takeovers and Mergers, indicating it doesn’t have plans to take over Vodafone.
The Panel and Takeovers and Mergers apparently asked AT&T Inc. (NYSE:T) to respond to the rumors, and the carrier said it doesn’t “intend to make an offer for Vodafone Group Plc (NASDAQ:VOD) (LON:VOD).” The carrier’s statement also notes that it is bound by Rule 2.8 of the U.K.’s Takeover Code. Specifically, AT&T said it “reserves the right to announce or participate in an offer or possible offer” for Vodafone Group Plc and / or take other actions restricted under that rule within six months after the date of the provided statement—but only “in the circumstances described in note 2 to Rule 2.8 of the Code”.
Buyback could wane interest in Vodafone deal
However, Michael J. De La Merced of Dealbook notes the latest buyback announcement reinforces the idea that AT&T Inc. (NYSE:T) has turned its back on a takeover bid for Vodafone Group Plc (NASDAQ:VOD) (LON:VOD), at least anytime soon. He points out that AT&T has capacity to make big deals, with $3.4 billion in cash and short-term investments on hand at the end of 2013 and an A3 credit rating from Moody’s Investors Service.
In its statement Monday, AT&T Inc. (NYSE:T) said it expects to maintain a net-debt-to-adjusted-EBITDA ratio in the 1.8 range or lower. It also indicated future repurchase decisions will be made opportunistically. The company’s chairman and chief executive officer Randall Stephenson indicated that the board’s authorization reaffirms its confidence in the strength of the business and its commitment to returning value to shareholders, while investing in company’s networks and operations.