Aug 25 2010
Varian Medical Systems, Inc. (NYSE: VAR) today announced that it has entered into an agreement with Bank of America N.A. to repurchase $225 million of its common stock under an accelerated share repurchase program. Concurrently, the company amended its revolving credit facility with Bank of America N.A. to increase its borrowing capacity from $150 million to $225 million.
Under the accelerated repurchase agreement, Varian will pay $225 million to Bank of America N.A. and receive approximately 3.8 million shares, or 90% of the shares to be repurchased based on the closing share price of the company's common stock on August 24, 2010. The total number of shares ultimately repurchased under the agreement will be determined upon final settlement. Varian will either receive additional shares of common stock or under certain circumstances be required to remit a settlement amount payable at Varian's option in cash or common stock, based generally on the volume weighted average share price of Varian's common stock during the next four to six months.
"Given the strength of Varian's balance sheet and the low interest rate environment, we have an opportunity to return shareholder value through this program," said Tim Guertin, president and CEO of Varian Medical Systems. "This program will be accretive to earnings going forward, but will have a minimal impact on fiscal year 2010."
These shares will be acquired under both the remainder of the 5 million share repurchase authorization approved by the company's Board of Directors on November 13, 2009, and the more recent 8 million share repurchase authorization approved by the company's Board of Directors on August 6, 2010. At the conclusion of the accelerated share repurchase program, the company expects that approximately 5 million shares will remain under the August 2010 authorization, depending on the company's stock price during the accelerated repurchase program. Shares purchased under the accelerated share repurchase program will be retired.
The repurchase will be financed partially from cash on hand and partially with borrowings from the company's amended revolving credit facility.
As of the end of the third quarter of its fiscal year 2010, the company had 124.5 million fully diluted shares outstanding. Since initiating share repurchases at the end of fiscal year 2001, the company has spent $1.8 billion to repurchase 43 million shares of common stock at an average price of $41.41 per share.
SOURCE Varian Medical Systems, Inc.