Parexel Announces Share Buyback
The board of Parexel International Corporation (PRXL), leading provider of biopharmaceutical services, recently cleared a share repurchase program authorizing the company to buyback up to $200 million of its common stock. The share repurchase program is subject to the approval of Parexel’s lenders. The company has not announced the expiration date for the program.
Parexel has cancelled its previous share repurchase program, of which $6 million still remained. The company has not specified the amount of common stock to be repurchased though it could be altered, extended, withheld or discontinued at any time. The share buyback will reduce the number of shares outstanding which stood at 60.1 million as of June 30, 2012.
The repurchase of shares will increase Parexel’s shareholder value in the long run. The announcement is not only expected to reinforce shareholders’ confidence but also boost the market value of the outstanding shares. The authorization program underlines the company’s commitment to optimize its capital structure and business fundamentals.
The company intends to fund the share repurchase with its existing cash on its balance sheet, cash flow from operations, credit facilities as well as other financing activities. Parexel exited fiscal 2012 with cash and cash equivalents of approximately $214 million and available credit of $175 million.
Management will have the discretionary power to decide the timing and amount of share buyback on the basis of a number of factors such as corporate requirements, share trading price and overall market situation. The program is also subject to legal obligations including federal and state securities laws. Parexel seeks to execute the program in the open market through a broker dealer, in block trades or in negotiated transactions.
Waltham, Massachusetts-based Parexel is a leading biopharmaceutical services company. It provides clinical research, consultation and commercialization as well as technology products to various industries such as pharmaceutical, biotechnology and medical devices. The company operates in three major segments — clinical research services, Parexel consulting and medical communications services and perceptive informatics. It competes with Covance Inc. (CVD) among others.
Parexel currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.
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