Web service company AOL Inc. (AOL:Quote) said Monday it has entered into a $600 million fixed-dollar collared accelerated stock repurchase agreement with Barclays Bank plc (BCS:Quote, BARC.L) and authorized a $5.15 per share special cash dividend.
The moves are part of the company's final steps in returning about $1.1 billion to its shareholders in 2012. After the sale in April of its more than 800 patents to Microsoft Corp. (MSFT) in a $1.056 billion cash deal, AOL is in the process of returning 100 percent of the cash to shareholders.
Further, AOL said it has entered into a tax asset protection plan to protect its valuable tax assets.
Artie Minson, AOL Chief Operating Officer and Acting Chief Financial Officer, said, "Since becoming a public company in December 2009, we have demonstrated an ability to both unlock and prudently manage our valuable asset portfolio, including our tax assets. Today we have done both again, outlining a clear path to returning $1.1 billion in cash to shareholders, while putting in place a necessary mechanism to ensure the preservation of our valuable tax assets."
Under the ASR deal, AOL will buy back $600 million worth of common stock by utilizing the previously approved share repurchase authorization and an incremental $10 million authorized by the company on August 26.
AOL will pay the $600 million at the beginning of the ASR agreement and expects to receive shares throughout the remainder of the year and a substantial majority of the shares underlying the transaction before year-end. This includes about 4 million shares that Barclays will deliver to AOL on August 30.
The company also authorized a special, one-time, cash dividend of $5.15 per share, payable on December 14, 2012 to shareholders of record at the close of business on December 5, 2012.
AOL noted that the tax asset protection plan will enable it to preserve its large domestic tax attributes that could be significantly impaired in the event a change of control is triggered under Section 382 of the Internal Revenue Code of 1986, as amended.
According to the company, the tax asset protection plan will act as a deterrent to any individual, individual fund or family of funds with common dispositive power acquiring 4.9 percent or more of the company's outstanding shares without the approval of the board of directors.
AOL closed Friday's regular session at $32.92. In Monday's pre-market, the stock is adding $1.58 or 4.80 percent to $32.92.
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