The speculations about its acquisition (mid 2006 and early 2007 respectively), two failed attempts at taking the company private (early 2007), exits by its C-level executives and Board of Directors (end of 2006 and mid of 2007) and now the company’s decision of $1 billion stock buyback program (end of 2007), have left ACS in a bit of a mess.
Questions about the future ownership of the company have been doing the rounds. Yet, it was the announcement of the stock buyback program that has revived critics’ interest in ACS. Last week, on Nov. 26th, ACS announced its stock repurchase program under which the board of the company released an authorization to purchase up to $200 million of ACS’ stock, effective immediately.
Generally, a company goes for a stock repurchase program to reduce the number of shares in the market — which will either increase the value of shares still available and reducing supply, or eliminate any threats by shareholders who may be looking for a controlling stake. In fact, the reasons of buyback program are not always good. That means such a drastic announcement by ACS would have increased uncertainty among its stakeholders.
Following the news, ACS’ stock prices also didn’t do very well in the market. It saw only a marginal gain, with a 1.5 percent increase from Nov. 26th, ’07 when it opened at 41.35 points to Nov. 30th, ’07 when it closed at 41.96 points. The company's revenues for the fiscal year 2007 totaled up to $5.77 billion. ACS employs 60,000 people and has a market cap of $4,216.6 million.
To ACS’ credit, however, these criticisms have seemingly not affected their customer relationships — the company’s rate of contract renewals has been nearly 95 percent in fiscal year 2007.
ACS in 2007
| March |
ACS received a proposal from the Chairman of its Board and Ceberus Capital Management to acquire the company’s common stock for a cash price of $59.25 per share |
| April |
The company received a revised proposal with a $62 per share price |
| June |
ACS announced the suspension of the exclusivity agreement between its Chairman and Cerberus to negotiate its acquisition. ACS decided to work under its previously selected special committee to negotiate its sale |
| August |
The exclusivity agreement expired, but due to the capital market conditions, the special committee sought an extension plan |
|
November 1st
|
The company asked five of the six of its independent directors to resign |
| November 21st |
Existing independent directors reviewed the proposed list of alternative directors, but no one suggested any |
| November 21st |
The company’s four board of directors resigned |
| November 26th |
ACS announced a $1 billion repurchase program for Class-A stock |
Source: Global Services
