With $255 million remaining on its share repurchase authorization, rent-to-own operator Rent-A-Center (NASDAQ: RCII ) announced yesterday that it just completed the $200 million accelerated stock buyback program it previously announced on May 2.
The rent-to-own specialist purchased 5.4 million shares at an average price of $36.97 per share from megainvestment house Goldman Sachs, representing more than 9% of the company's outstanding shares at the time the May announcement was made. The buyback was completed under Rent-A-Center's previously authorized $1.25 billion stock repurchase plan.
Under an accelerated repurchase program, a company immediately buys back its shares from an investment bank, which borrows the shares it sells to the company. The institution then buys shares in the open market over time to close its borrowings. The company is able to retire those shares immediately, reducing its share count at a faster rate than if it's dragged out over the entire length of the buyback program, which may, in fact, get cancelled if business conditions change for the worst. The minimum and maximum amounts are set by a "collar."
Rent-A-Center's shares are just about where they were when the accelerated buyback program was announced, but they had been as much as 19% higher in between then, which is why the average price paid is above where the stock trades today.