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News: Marvel to Buy Back Stock
posted July 12, 2004
July 12 -- Marvel Enterprises announced its intention to begin a $100 million common stock repurchase program. This means Marvel will be in the market for purchasing shares on the open market or negotiate to make purchases from shareholders between now and the end of 2005.
The repurchasing program also comes with an agreement for shareholders Isaac Perlmutter and Avi Arad, the company's Vice Chairman and the CEO of Marvel Studios respectively, to stop selling shares for the duration of the program. Perlmutter and Arad both sold a massive amount of shares in May, approximately six million shares, which many business writers and outside observers believe had a negative impact on the value of Marvel stock going into the period of goodwill surrounding a sure-to-be-successful Spider-Man 2. The stock dropped in value more than 10 percent in the first two weeks of July despite the record-setting performance of the summer blockbuster movie, also in part because restrictive deals made during the property's long journey to screen limit Marvel's benefit from the ticket sales and because enterprises in the near future planned by the company promise to fall short of the Spider-Man film franchise's wide appeal.
The program is made possible by Marvel's increased cash holdings ($150 million) and perceived future cash holdings ($200 million by year's end). Marvel redeemed itself of its long-term debt in mid-June, ending in a symbolic sense a several-year odyssey of Marvel being saddled with debt in order to finance other endeavors.
Marvel's program in no way forces the company to buy back stock, and the amount of stock to be purchased will depend on its price, market conditions, and the economic outlook of the company in the months ahead. Other options for the cash flow, such as purchasing another company, could be on the table if the opportunity presents itself -- although that certainly wasn't a propitious business strategy for the company in the 1990s.