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Parexel Signs ASR Agreement - Analyst Blog
Parexel International Corporation ( PRXL ), a leading provider of biopharmaceutical services, recently announced that it has inked an Accelerated Share Repurchase (ASR) agreement with J.P. Morgan Securities LLC, an agent for JPMorgan Chase Bank, National Association to buyback an aggregate of $50 million of its common stock.
The ASR is a fragment of Parexel's share repurchase program announced on August 8, authorizing the company to buyback up to $200 million of its common stock. The share repurchase program received the approval of Parexel's lenders on August 17. The share buyback will reduce the number of shares outstanding which stood at 60.1 million as of June 30, 2012.
The company intends to fund the ASR and other open market purchases with its existing cash on its balance sheet, cash flow from operations, credit facilities as well as other financing activities. Parexel exited fiscal 2012 with cash and cash equivalents of approximately $214 million and available credit of $175 million.
Per the ASR agreement, Parexel will procure roughly 1.3 million shares at the commencement. The final settlement, based on the volume-weighted average price of the shares, will resolve the aggregate number of shares under the ASR agreement.
ASR will hasten the share buyback program and promptly reduce the number of outstanding shares at a fixed cost. Management believes that the ASR is an important opportunity to improve Parexel's capital structure. The repurchase of shares will increase Parexel's shareholder value in the long run. The announcement is not only expected to reinforce shareholder confidence, but also boost the market value of the outstanding shares.
Waltham, Massachusetts-based Parexel is a leading biopharmaceutical services company. It provides clinical research, consultation and commercialization as well as technology products to various industries such as pharmaceutical, biotechnology and medical devices. The company operates in three major segments - clinical research services, Parexel consulting and medical communications services and perceptive informatics. It competes with Covance Inc. ( CVD ) among others.
Parexel currently retains a Zacks #2 Rank, which translates into a short-term Buy rating.
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