Google plans first-ever share buyback
Thursday, November 12, 2009 10:26 AM
For the first time in its history, Google plans to buy back its own shares, following the completion of the AdMob acquisition.
Google CEO Eric Schmidt told Bloomberg of the plan Tuesday, which of course assumes the deal passes regulatory scrutiny. Google announced plans Monday to buy AdMob--one of the most successful mobile advertising companies--for US$750 million in stock, making it the third-largest acquisition in Google's history.
Some had wondered why Google used stock instead of dipping into its cash horde to make the deal, which has the effect of diluting the holdings of other shareholders. However, by snapping up US$750 million worth of its own stock, Google can offset the additional shares of stock put on the market for AdMob employees.
Tech Trader Daily spotted a research note from Broadpoint Amtech analyst Benjamin Schachter that said while Google is not likely to make this a regular thing, "it is a welcome first from Google". Some companies buy back shares on a regular or semi-regular basis to boost their stock price.
Google also filed a form with the Securities and Exchange Commission Tuesday noting that in some cases it may pay cash for AdMob shares if it is unable to get 32 AdMob shareholders to declare themselves "accredited investors" and thus eligible for Google stock instead of cash.
This article was first published as a blog post on CNET News.
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