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Pet products retailers Chewy (NYSE:CHWY) has agreed to repurchase an aggregate of 17,550,000 shares of its Class A common stock, at a price per share of $28.49, it said Wednesday after market.
The price represents a 5% discount to Tuesday’s close, resulting in an aggregate repurchase price of about $500 million from Buddy Chester Sub, which is an entity affiliated with funds advised by BC Partners Advisors LP, Chewy’s (CHWY) largest shareholder.
The repurchased shares will be cancelled and retired upon completion of the Repurchase.
In addition, Chewy (CHWY) said, the repurchase is an accretive use of capital and provides an efficient mechanism to repurchase shares at a discount to the current market price, while further reducing the ownership position of the company’s largest shareholder.
“Chewy’s increasing profitability and free cash flow generation enables the company to further optimize its capital allocation strategy through this transaction, which comes in addition to the recently announced $500 million share repurchase program,” it further added.
Following the repurchase, Chewy will have approximately 418 million shares of Class A common stock and Class B common stock outstanding. The repurchase, being executed separately from Chewy’s existing $500 million share repurchase program authorized on May 24, is expected to close by June 27, 2024.