CHICAGO - Agricultural giant ADM (NYSE: ADM) has entered into an agreement with Merrill Lynch International to repurchase $1 billion of its common stock through an accelerated share repurchase (ASR) program, the company announced today. This move is part of ADM's broader strategy to return value to its shareholders, following a substantial share repurchase in the previous quarter.
The company will start receiving shares at the end of March 2024, with additional monthly deliveries until the end of the second quarter. The exact number of shares to be repurchased will be determined by a formula based on ADM's share price during the transaction period, with the final purchase price reflecting a discount on the volume-weighted average price.
ADM's Board Chair and CEO, Juan Luciano, highlighted the firm's commitment to shareholder returns, stating that after buying back $1.5 billion in shares in the last quarter of 2023 and nearly $330 million in the first quarter of 2024, they are now accelerating the program. Luciano revealed plans to repurchase an additional $2 billion worth of shares throughout the rest of the year.
This latest ASR agreement is a component of ADM's existing share repurchase program, which authorizes the buyback of up to 200 million shares and is set to run through 2024.
ADM, known for its role in the agricultural supply chain and as a producer of human and animal nutrition products, has been focusing on innovation and sustainability.
The information provided is based on a press release statement from ADM.
InvestingPro Insights
In light of ADM's (NYSE: ADM) aggressive approach to share repurchases, it's worth noting the company's management has been actively buying back shares, which is a strong signal of their confidence in the company's value. This aligns with ADM's announcement of the $1 billion accelerated share repurchase program, further emphasizing their strategy to enhance shareholder value.
Moreover, ADM's commitment to its shareholders is reflected in its impressive history of dividend payments, having raised its dividend for 49 consecutive years and maintained payments for 54 consecutive years. This track record offers investors a sense of reliability in terms of shareholder returns. InvestingPro Tips also highlight that ADM is trading at a low earnings multiple, with a P/E Ratio (Adjusted) for the last twelve months as of Q3 2023 standing at 7.21, suggesting that the stock may be undervalued relative to its earnings capacity.
From a financial health perspective, ADM's liquid assets exceed its short-term obligations, providing a cushion against market volatility and unexpected expenses. However, it's important to acknowledge that analysts have revised their earnings downwards for the upcoming period, which may warrant closer attention from potential investors.
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