Cummins Inc. today announced that it has entered into an accelerated share repurchase (ASR) agreement with Goldman, Sachs & Co. (GS &Co.) to repurchase $500 million of Cummins' common stock. Today's ASR is part of Cummins' previously announced share repurchase plans authorized by the Board of Directors.
Under the terms of the ASR agreement, Cummins will repurchase $500 million of its common stock from GS &Co. with an initial delivery of approximately 4 million shares based on current market prices. The final number of shares to be repurchased will be based on Cummins' volume-weighted average stock price during the term of the transaction, less a discount. The ASR is expected to be completed by the end of the second quarter of 2016.
"This $500 million ASR agreement reflects our view that the Company's shares are currently trading well below intrinsic value, and is consistent with our plans to return 75 percent of Operating Cash Flow to shareholders in 2016," said chairman and CEO Tom Linebarger.
