Chegg Inc . (NYSE:CHGG), a prominent player in the connected learning landscape, has announced an accelerated share repurchase (ASR) agreement with Morgan Stanley Bank N.A., valued at $150 million. This strategic initiative, part of the company's ongoing $2.2 billion securities repurchase program, aims to bolster shareholder value and reflects Chegg's robust free cash flow generation.
The ASR agreement stipulates an initial delivery of approximately 13.5 million shares to Chegg by today. The final number of shares to be repurchased will be determined by the volume-weighted average price of Chegg's stock during the term of the ASR, with a discount applied, and the final settlement is anticipated by the second quarter of 2024.
Dan Rosensweig, CEO & President of Chegg, conveyed optimism regarding the company's future prospects and its endeavors to develop AI-enabled personal learning assistants on a global scale. "This ASR agreement also demonstrates their strong free cash flow generation and commitment to enhancing shareholder value," Rosensweig said to Chegg's website.
Despite this move to return value to shareholders, it is noteworthy that Chegg's stock has experienced a significant decline over the year, dropping 65% in contrast to the S&P 500's gain of 17%. Nevertheless, today's premarket activity saw Chegg's shares climb 2.6% following the ASR announcement.
Following the execution of this ASR, Chegg will have a remaining balance of $3.7 million from its previous share buyback authorization as of October 31, 2023. The company's repurchase program does not have an expiration date, providing flexibility for future buybacks as conditions warrant.
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