TSX Accepts Notice of Intention to Make Normal Course Issuer Bid
Magna International Inc. announces a Normal Course Issuer Bid to purchase up to 300,000 Common Shares, representing 0.11% of its public float. The Bid aims for share cancellation, stock-based compensation, and profit sharing plan obligations. The Bid starts on February 15, 2024, and ends on February 14, 2025, with purchases made on TSX and NYSE.
Magna International Inc.'s announcement of a Normal Course Issuer Bid (NCIB) to repurchase up to 300,000 of its common shares represents a strategic effort to manage its capital structure. Market repurchase programs are often interpreted as a signal of management's confidence in the company's future prospects and a perception that the stock is undervalued. The repurchase plan may also serve to boost earnings per share (EPS) by reducing the number of shares outstanding, potentially leading to a more favorable valuation by investors.
However, the magnitude of the buyback, at 0.11% of its public float, is relatively small and may not have a significant impact on the market price or the company's capital structure. Investors should consider the trade-off between the use of cash for share repurchases versus other potential uses, such as investment in growth opportunities or debt reduction. The repurchase plan's impact on the stock price will also depend on market conditions and investor sentiment at the time of the buybacks.
From a financial analysis perspective, the weighted-average purchase price of US$54.15 paid by Magna for its previous NCIB provides a reference point for evaluating the company's capital allocation efficiency. The fact that the company is continuing with a new bid after the previous one suggests a consistent strategy to manage its share count and return value to shareholders.
Investors should examine Magna's cash flow statements and balance sheet to assess the affordability of this repurchase program in the context of its overall financial health. The repurchase program must be weighed against Magna's operational needs, debt obligations and investment programs to ensure that it does not adversely affect the company's financial flexibility. The timing and volume of share repurchases, governed by regulatory limitations and company-set blackout periods, will influence the program's effectiveness in supporting the share price.
It is crucial to understand the regulatory framework governing share repurchases. Magna's adherence to the safe harbor conditions of Rule 10b-18 under the U.S. Securities Exchange Act of 1934 and the rules and policies of the Toronto Stock Exchange is designed to prevent market manipulation. These rules limit the volume of shares that can be repurchased daily, which helps ensure that the buybacks do not unduly influence the stock's market price.
The option to purchase shares through private agreements or Specific Share Repurchase Programs at a discount to market price could provide Magna with cost savings, but such transactions must be transparent and compliant with securities regulations. The use of a pre-defined automatic securities purchase plan during blackout periods is a safeguard that allows for continuity in the repurchase program while maintaining fairness in the market.
02/13/2024 - 06:30 AM
AURORA, Ontario, Feb. 13, 2024 (GLOBE NEWSWIRE) -- Magna International Inc. (TSX: MG, NYSE: MGA) today announced that the Toronto Stock Exchange ("TSX") had accepted its Notice of Intention to Make a Normal Course Issuer Bid (the "Notice"). Pursuant to the Notice, Magna may purchase up to 300,000 Magna Common Shares (the "Bid"), representing approximately 0.11% of its public float. As at February 1, 2024, Magna had 286,780,238 issued and outstanding Common Shares, including a public float of 286,433,600 Common Shares.
The primary purposes of the Bid are purchases for cancellation, as well as purchases to fund Magna’s stock-based compensation awards or programs and/or Magna’s obligations to its deferred profit sharing plans. Magna may purchase its Common Shares, from time to time, if it believes that the market price of its Common Shares is attractive and that the purchase would be an appropriate use of corporate funds and in the best interests of the Corporation.
The Bid will commence on February 15, 2024 and will terminate no later than February 14, 2025. All purchases of Common Shares under the Bid may be made on the TSX, at the market price at the time of purchase in accordance with the rules and policies of the TSX or on the New York Stock Exchange ("NYSE") in compliance with Rule 10b-18 under the U.S. Securities Exchange Act of 1934. In addition to purchases made on the open market through the facilities of the TSX and NYSE, Magna may also make purchases through alternative trading systems in Canada and the United States, and by private agreement or under a specific share repurchase program pursuant to an issuer bid exemption order issued by a securities regulatory authority (a “Specific Share Repurchase Program”). Purchases made by way of such private agreements or Specific Share Repurchase Program will be at a discount to the prevailing market price. The rules and policies of the TSX contain restrictions on the number of shares that can be purchased under the Bid, based on the average daily trading volumes of the Common Shares on the TSX. Similarly, the safe harbor conditions of Rule 10b-18 impose certain limitations on the number of shares that can be purchased on the NYSE per day. As a result of such restrictions, subject to certain exceptions for block purchases, the maximum number of shares which can be purchased per day during the Bid on the TSX is 202,962 based on 25% of the average daily trading volume for the prior six months (being 811,850 Common Shares on the TSX). Subject to certain exceptions for block purchases, the maximum number of shares which can be purchased per day on the NYSE will be 25% of the average daily trading volume for the four calendar weeks preceding the date of purchase. Subject to regulatory requirements, the actual number of Common Shares purchased and the timing of such purchases, if any, will be determined by Magna having regard to future price movements and other factors. All purchases will be subject to Magna’s normal trading blackouts. Any purchases made during a blackout period will only be made pursuant to a pre-defined automatic securities purchase plan that Magna may enter into with its designated broker.
Magna’s normal course issuer bid announced in November 2022 for the purchase of up to 28,445,000 Common Shares expired on November 14, 2023. As at the close of trading on November 14, 2023, Magna had purchased 245,904 Common Shares at a weighted-average price of US$54.15 . Purchases were made on open market through the facilities of the TSX and NYSE as well as through alternative trading systems in Canada and the United States.
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ABOUT MAGNA( 1 ) (2) employees across 342 manufacturing operations and 104 product development, engineering and sales centres spanning 28 countries. With 65+ years of expertise, our ecosystem of interconnected products combined with our complete vehicle expertise uniquely positions us to advance mobility in an expanded transportation landscape.
For further information about Magna (NYSE:MGA; TSX:MG), please visit www.magna.com or follow us on social.
FORWARD-LOOKING STATEMENTS
This press release may contain statements that, to the extent that they are not recitations of historical fact, constitute "forward-looking statements" within the meaning of applicable securities legislation, including, but not limited to, future purchases of our Common Shares under the Normal Course Issuer Bid, including pursuant to private agreements or a specific share repurchase program under an issuer bid exemption order issued by the Ontario Securities Commission. Forward-looking statements may include financial and other projections, as well as statements regarding our future plans, objectives or economic performance, or the assumptions underlying any of the foregoing. We use words such as "may", "would", "could", "should" "will", "likely", "expect", "anticipate", "believe", "intend", "plan", "forecast", "outlook", "project", "estimate" and similar expressions suggesting future outcomes or events to identify forward-looking statements. Any such forward-looking statements are based on information currently available to us, and are based on assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks, assumptions and uncertainties, many of which are beyond our control, and the effects of which can be difficult to predict. These risks, assumptions and uncertainties include, without limitation, the impact of: macroeconomic and geopolitical events; economic cyclicality; relative foreign exchange rates; financial flexibility risks; stock price fluctuations; legal and regulatory proceedings against us; changes in laws and other factors set out in our revised Annual Information Form filed with securities commissions in Canada and our annual report on Form 40-F/A filed with the United States Securities and Exchange Commission, and subsequent filings. In evaluating forward-looking statements, we caution readers not to place undue reliance on any forward-looking statements and readers should specifically consider the various factors which could cause actual events or results to differ materially from those indicated by such forward-looking statements.
( 1) Manufacturing operations, product development, engineering and sales centres include certain operations accounted for under the equity method. (2) Number of employees includes over 166,000 employees at our wholly owned or controlled entities and over 13,000 employees at certain operations accounted for under the equity method.
What is Magna International Inc.'s intention with the Normal Course Issuer Bid?
Magna International Inc. intends to purchase up to 300,000 Common Shares for various purposes, including share cancellation, stock-based compensation awards, and deferred profit sharing plans.
When does the Normal Course Issuer Bid start and end?
The Bid commences on February 15, 2024, and will conclude on February 14, 2025.
Where will the purchases under the Bid be made?
Purchases of Common Shares under the Bid may be made on the TSX, at market price, or on the NYSE in compliance with Rule 10b-18 under the U.S. Securities Exchange Act of 1934.
What restrictions exist for the number of shares that can be purchased under the Bid?
The TSX and NYSE have restrictions based on average daily trading volumes, limiting the maximum number of shares that can be purchased per day.
What happened to Magna International Inc.'s previous normal course issuer bid?
Magna's previous bid for the purchase of up to 28,445,000 Common Shares expired on November 14, 2023, with 245,904 Common Shares purchased at a weighted-average price of US$54.15.
