The (ABC) BOD authorizes a special $650M share repurchase program to supplement the Company's warrant hedging strategy. The purpose is to mitigate the dilutive potential of the March 2013 warrants.
The company plans to exclude the impact of the special share repurchases from its presentation of adjusted EPS from continuing operations beginning with its earning report for fiscal Q3 (June 30) and continue until the warrants expire or are exercised. The firm also excludes the accounting dilution that the warrants have on adjusted diluted EPS. The special share buyback will not have an impact on the company's guidance issued on April 24.
ABC issued subsidiaries of Walgreen Co. and Alliance Boots GmbH warrants to purchase up to 22,696,912 shares of its common stock at $51.50/share exercisable during the six-month period beginning in March 2016 and warrants to purchase 22,696,912 shares at $52.50/share during the six-month period beginning in March 2017.
The special share repurchase program and the issuer-capped call option transactions will mitigate ~80% of the dilutive effects of the warrants.