Coca-Cola Announces New 500 Million-Share Buyback Program
Coca-Cola Co. (KO), the world’s largest soft drink maker, authorized a new plan to buy back 500 million shares, valued at about $18.9 billion at yesterday’s closing price, as it returns cash to investors.
The new authorization doesn’t affect the plan to buy back $2.5 billion to $3 billion in stock this year, the Atlanta-based company said today in a statement. Coca-Cola said its current repurchase program was authorized in 2006.
Coca-Cola has risen 48 percent since Chief Executive Officer Muhtar Kent took over in July 2008, compared with an 9.9 percent gain for rival PepsiCo Inc. (PEP) Kent has pledged to reach $200 billion in revenue for the company and its bottlers globally by 2020, double the sales generated in 2010.
“This company is in a good spot -- they don’t know what to do with all their cash except to give it back to shareholders,” Jack Russo, an analyst with Edward Jones & Co. in St. Louis, said in a telephone interview. “They’ve been active share repuchasers for a long time.”
Coca-Cola rose 0.3 percent to $37.84 at the close in New York. The shares have gained 8.2 percent this year.
Directors also declared a quarterly dividend of 25.5 cents, payable Dec. 17 to shareholders of record as of Nov. 30. The company completed a 2-for-1 share split in August.
The company had $18.1 billion in cash and equivalents as of Sept. 28. Coca-Cola authorized the repurchase of as many as 300 million shares in 2006.
Kent has adjusted prices and introduced new products to cope with weaker demand in European nations facing a persistent debt crisis and slowing growth in China and Brazil. Earlier this week, the company reported a 3.9 percent increase in third- quarter profit as sales volumes in Europe improved.
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