H&R Block Plans $3.5 Billion Buyback After Selling Bank Unit

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H&R Block Inc., the biggest U.S. tax preparer, plans to buy back as much as $3.5 billion of its stock now that it has completed the sale of its banking unit. The shares surged in extended trading.

H&R Block will start a modified Dutch auction on Wednesday for as much as $1.5 billion in stock, about 16 percent of its market value, the Kansas City, Missouri-based company said in a statement Tuesday. The stock rose 8.3 percent to $35.70 at 4:33 p.m. in New York.

The tax preparer had been working to sell the banking unit to exit Federal Reserve oversight and free up money for share repurchases. The buyer, BofI Holding Inc., agreed to continue to offer financial services to H&R Block clients.

H&R Block said it will pay $32.25 to $37 for shares in the auction, which is contingent on securing a new line of credit. After that, the company said it may buy an additional $2 billion of stock through June 2019.

BofI received $419 million in cash and assumed an equal amount of liabilities in the transaction, the San Diego-based bank said in a separate statement.