NEW YORK (AP) — AOL Inc. has started a “Dutch auction” tender offer to buy back up to $400 million of its common stock.
A “Dutch auction” offer allows shareholders to say how many shares they want to tender and at what price within a specified range. Based on that information, the company then determines the lowest price per share within the range that lets it buy the amount of shares that it wants.
AOL stockholders will have the chance to tender some or all of their shares between $27 and $30 per share.
The company’s stock gained $1.09, or 4 percent, to $28.40 in premarket trading on Thursday.
The tender offer starts Thursday and expires on Aug. 2 unless extended or ended earlier.
The $400 million purchase price puts the total amount AOL plans to return to shareholders this year at approximately $1.1 billion.
The company said it plans to return all of the proceeds from its sale of more than 800 patents and related patent applications to Microsoft Corp. to its shareholders.
AOL says it may have to use a tender offer, buybacks, privately negotiated transactions and dividend payments to return the proceeds from the patent sale. The company says it is confident that it will be able to return all of the proceeds before the year’s end without impacting its tax attributes.
Earlier this month AOL shareholders voted at their annual meeting to re-elect all eight directors on the company’s board, fending off a takeover attempt by one of its largest investors.
In May, AOL posted a steep jump in first-quarter profit that beat Wall Street expectations, as lower costs more than offset a drop in revenue.
