Recently, the board of directors at
Dollar Tree, Inc.
) announced a new share repurchase program that authorizes the
company to buy back shares worth $2 billion. This authorization
overrides the previous buyback program announced in Oct 2011.
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Dollar Tree also concluded a private placement deal worth $750
million worth of Senior Notes with the institutional investors.
JPMorgan Securities LLC, a subsidiary of
JPMorgan Chase & Co.
) and Wells Fargo Securities, LLC, a wing of
Wells Fargo & Company
) acted as the joint placement agents. The notes include $300
million of 4.03% Senior Notes maturing in Sep 2020, $350 million
of 4.63% Senior Notes maturing in Sep 2023 and $100 million of
4.78% Senior Notes maturing in Sep 2025.
Further, Dollar Tree entered into a deal with JPMorgan Chase
Bank, N.A - a subsidiary of JPMorgan - to buy back $1 billion of
shares under a variable maturity accelerated share repurchase
program. Half of the shares to be bought back under this program
are collared and the other half are uncollared.
The $1 billion will be financed through the proceeds of the
above-mentioned placement deal and $250 million in cash. As of
Aug 3, 2013, the company had $250 million outstanding under its
revolving credit facility and $413.7 million as cash available.
Dollar Tree has been meticulously returning capital to its
shareholders. We believe that the latest capital activities are
part of the company's strategy to maximize shareholder value.
Currently, Dollar Tree carries a Zacks Rank #3 (Hold).
Another stock that is worth considering is
Dollar General Corporation
), which carries a Zacks Rank #2 (Buy).