Schwab to start Dutch auction tender for $2.3 billion shares, declares quarterly, special dividend

By Jennifer Chiou

New York, July 2 - The Charles Schwab Corp. announced plans for a $2.3 billion share repurchase through a modified Dutch auction tender offer to begin Tuesday and also declared a regular quarterly cash dividend of $0.05 per share.

The tender is for up to 84 million shares, with the right to purchase up to an additional 25 million shares, at a price per share not less than $19.50 or more than $22.50.

The offer is set to end at midnight ET on July 31.

Schwab also announced the declaration of a special cash dividend of $1.00 per common share.

The company added that it entered into a separate stock purchase agreement with chairman and chief executive officer Charles R. Schwab, the company's largest stockholder with about 18% of the shares. Schwab will not participate in the tender, but will sell up to 18 million shares after the completion of the offer.

The company also intends to issue up to $750 million of debt, consisting of senior notes and hybrid capital securities.

The actions are part of Schwab's plan to return $3.5 billion of capital to stockholders and to create a more efficient and cost-effective capital structure. The dividend will return $1.2 billion to stockholders.

Both dividends will be payable on Aug. 24 to holders of record as of July 24.

The plan follows the July 1 completion of the sale of U.S. Trust Corp., which generated $2.7 billion of after-tax proceeds.

Schwab pointed out that this tender offer is in addition to the $446 million remaining under the existing board stock repurchase authorization.

D.F. King & Co., Inc. is the information agent (800 659-6590).

San Francisco-based Schwab provides financial services.

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