Bed Bath & Beyond (NASDAQ:BBBY) will buying back $150 million worth of stock, or about 5 million shares, from JPMorgan Chase under an accelerated repurchase program.
The home goods retailer had previously authorized $825 million worth of stock buybacks over the next three years, but said in its fiscal 2021 first-quarter earnings report yesterday it would complete a total of $375 million of the repurchases on a sped-up basis when or before the current quarter ends on Feb. 27.
As it had already completed $225 million worth of accelerated stock repurchases back in October, it was nearing the deadline with $150 million remaining. After the buyback is finished, Bed Bath & Beyond will have $450 million remaining on its repurchase authorization.
Hurry up and wait
Under an accelerated repurchase program, a company immediately buys back its stock from an investment bank, in this case JPMorgan, which borrows the shares it sells them the company. The financial institution then buys those shares in the open market over time to close out its borrowings.
The benefit to the company is it's able to retire those shares immediately, reducing its share count at a faster rate, rather than if it's dragged out over the entire length of the buyback authorization, which may get canceled if business conditions change for the worse.
Bed Bath & Beyond points out that at the final settlement, JPMorgan may actually owe the retailer more stock, or it might owe the bank more stock or even more cash. The final settlement is expected to be completed by Feb. 27.