Feb. 10--Helen of Troy's board of directors Monday announced the El Paso consumer products company will repurchase up to $550 million of company stock, including up to $300 million through an auction beginning today.
The entire repurchase, which includes $250 million to be sold over three years, would buy back almost 29 percent of the company's 32.1 million shares.
The repurchase comes almost a week after the founder of a $1 billionNew York hedge fund, with a 3.7 percent chunk of Helen of Troy stock, sent a letter to the Helen of Troy board urging it to take actions to increase the company's stock value, including trying to sell the company.
The company, with annual sales of more than $1 billion, develops and sells hair dryers, hair shampoos, humidifiers, household gadgets and other consumer products under well-known national-brands, including Revlon, Vicks, and Oxo. It employs about 1,500 people, including about 500 at its West El Paso headquarters.
The repurchase plan is the result of a "thorough and ongoing evaluation of opportunities to enhance long-term value for shareholders," Timothy Meeker, board chairman, said in a written statement. "Utilizing our strong balance sheet to fund a significant share repurchase provides immediate and continuing benefits to shareholders and underscores our confidence in the company's current strategy and future growth potential."
The company will use cash and borrowings under its revolving credit line to buy back shares through March 10 under a modified "Dutch auction," it reported in a statement. It will buy back stock from shareholders at a yet-to-be determined price of $57.75 to $66.50 per share in the auction beginning today and ending March 10, at 10 p.m., El Paso time.
Under the auction, a shareholder can specify at what price within the stated range it will sell the stock. The company will select the price it will pay and buy as many shares as it can up to the $300 million.
The company's stock (HELE) was trading at $63.37 per share, up $4.02 per share, in midday trading on the Nasdaq stock exchange.
Tom Benson, Helen of Troy interim chief executive officer, said in a statement that the company has enough money for the stock repurchase and to also continue organic growth and make acquisitions as it has done in the past.
Benson was made interim CEO after Gerald Rubin, Helen of Troy founder, resigned last month as CEO and board chairman. Julien Mininberg, head of Helen of Troy's Healthcare/Home Environment products division was named CEO, and takes that job March 1.
Scott Ferguson, an activist investor who founded Sachem Head Capital Management last year, said in a letter to the Helen of Troy board last week that the company's shares were undervalued, in part due to the board's poor governance. He said selling the company would be the best way to maximize value for shareholders. He reported that Sachem Head had talked with potential buyers. The hedge fund had 1.2 million shares of Helen of Troy stock, or 3.7 percent of company shares, it reported last week.
The Helen of Troy board fired back with a statement that said the board is confident in its current strategy to deliver shareholder value and that it would continue to evaluate opportunities to enhance that value.
Vic Kolenc may be reached at 546-6421
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