Recently, the board of directors at Dollar Tree, Inc. (DLTR) announced a new share repurchase program that authorizes the company to buy back shares worth $2 billion. This authorization overrides the previous buyback program announced in Oct 2011.
Dollar Tree also concluded a private placement deal worth $750 million worth of Senior Notes with the institutional investors. JPMorgan Securities LLC, a subsidiary of JPMorgan Chase & Co. (JPM) and Wells Fargo Securities, LLC, a wing of Wells Fargo & Company (WFC) acted as the joint placement agents. The notes include $300 million of 4.03% Senior Notes maturing in Sep 2020, $350 million of 4.63% Senior Notes maturing in Sep 2023 and $100 million of 4.78% Senior Notes maturing in Sep 2025.
Further, Dollar Tree entered into a deal with JPMorgan Chase Bank, N.A – a subsidiary of JPMorgan – to buy back $1 billion of shares under a variable maturity accelerated share repurchase program. Half of the shares to be bought back under this program are collared and the other half are uncollared.
The $1 billion will be financed through the proceeds of the above-mentioned placement deal and $250 million in cash. As of Aug 3, 2013, the company had $250 million outstanding under its revolving credit facility and $413.7 million as cash available.
Dollar Tree has been meticulously returning capital to its shareholders. We believe that the latest capital activities are part of the company’s strategy to maximize shareholder value.
Currently, Dollar Tree carries a Zacks Rank #3 (Hold). Another stock that is worth considering is Dollar General Corporation (DG), which carries a Zacks Rank #2 (Buy).