Hi there,
Had a question on share repurchases. I have a company that was recently acquired.
I noticed on their statements, that they underwent an aggressive share repurchase program starting 3 years ago (2016). The company has excess cash but did increase debt by about 30% that year.
Then in 2019, they were acquired at a premium.
Does the share repurchase have any impact on the acquisition? Was the company setting itself up for a potential acquisitions or something with the stock buyback? What is the relationship?
My only reasoning so far:
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Reduce # shares to reduce cost of capital, thereby make the valuation higher due to lower discount rate of cash flows.
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Consolidate ownership to ensure an approval of the sale of the company.
Any other thoughts?