Marsh & McLennan has entered into an accelerated share repurchase program to buy back $500 million of its stock, the company said.
The New York-based services firm, the parent company of insurance broker Marsh Inc. and reinsurance broker Guy Carpenter, said it has entered into the repurchase transaction with an unnamed financial institution to repurchase the shares.
The repurchase program was announced on May 8.
The repurchase of stock is a strategy employed by companies to increase their stock value by making fewer shares available for trade. Traditionally, repurchases take place over an extended period of time, but the accelerated program means the purchase is intended to be finished in a short period.
“MMC's improved financial position gives us flexibility to invest in our businesses and return cash to shareholders,” said Michael G. Cherkasky, president and chief executive officer of MMC, in a statement. “Today's repurchase agreement, together with the 12 percent dividend increase announced in the first quarter of 2007, illustrates the board and management's commitment to enhancing shareholder value.”
MMC declared a quarterly dividend of 19 cents a share on March 14 to be paid on May 15. According to a Securities and Exchange Commission filing, the company paid $105 million in dividends in the first quarter, compared to $93 million, or $17 cents a share, for the same period in 2006.
The total number of shares to be repurchased will be based on the volume-weighted average price of MMC's stock through a contractually specified averaging period, MMC said. The period of time was not disclosed.
The company said there are 555.4 million shares of common stock outstanding. According to the government filing, MMC could purchase up to 49.9 million shares. No shares were repurchased during the first quarter of this year. The filing also said the current repurchase plan would be completed “promptly.”
A company spokeswoman said the intention is to substantially complete the transaction before the end of the second quarter.
An SEC filing on the MMC accelerated repurchase program has yet to be filed, but a shareholder's meeting is scheduled for this Thursday.
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