Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Wednesday, May 30, 2007

IBM Buys Stock and Borrows Money

IBM is buying back $12.5 million of its own stock (about 8% of the outstanding) from three banks and borrowing $11.5 billion to make the purchase.  Since 1995 it has spent $80 billion on stock repurchases, and in April the board authorized $15 billion in new repurchases.  IBM has been spending $100 million a day on stock buybacks.   An unusual aspect of the buyback is that IBM is financing it through a Netherlands subsidiary, to avoid the higher US taxes that would result from repatriating the funds. See NYTimes, I.B.M. Borrows $11.5 Billion to Buy Back Stock; WSJ, IBM Hones the Stock Buyback.

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