NEW YORK (GenomeWeb) – Qiagen on Sunday announced plans to return approximately $250 million to shareholders through a synthetic share repurchase program that combines a direct capital repayment with a reverse stock split.
These actions have been used previously by other large, multinational Dutch companies as a way to provide returns to shareholders, and will lead to an adjustment in Qiagen's share capital, the company said. If adopted, the proposal is expected to be similar to Qiagen repurchasing approximately $250 million of its own shares, but will enable the return of capital to all shareholders more quickly and efficiently than through a traditional open-market repurchase program.
More specifically, the share repurchase comprises three steps. First, the par value of Qiagen's common shares (€.01 per share) will be increased through a transfer from the "share premium reserve" (included in "additional paid-in capital" on the company's balance sheet) to allow for the capital repayment to shareholders.
A reverse stock split will then consolidate shares at a ratio equal to the market value of the total number of outstanding shares minus the capital repayment amount, divided by the market value of the total number of outstanding shares. Finally, the capital repayment will be paid out directly to shareholders (as of the record date), and the par value will be reduced to the original level of €.01 per share.
The adjustment to Qiagen's capital structure will be proposed at an extraordinary general meeting of shareholders next month. The related series of transactions are expected to be completed in early January 2017, in part due to a Dutch legal requirement for a two-month creditor objection period after shareholder approval of the proposal.
"Qiagen is at an inflection point in setting a new sales growth trajectory, and our commitment to increase returns to shareholders underscores our confidence in achieving our targets and creating greater value," CEO Peer Schatz said in a statement. "Against the backdrop of our stronger performance and improving cash flow, we are committed to creating a more efficient capital structure while maintaining a healthy balance sheet to increase returns and invest in profitable growth opportunities."
The share repurchase is part of a commitment announced by the company last month to return $300 million to shareholders by the end of 2017. Qiagen said it plans to fund the capital repayment from existing cash reserves and expects to maintain its current non-rated, investment-grade credit profile. As of June 30, Qiagen had $328.2 million in cash and cash equivalents and $78.3 million in short-term investments.