A&B stock buyback launched
By Andrew Gomes
Advertiser Staff Writer
In an effort to improve the value of its stock, Alexander & Baldwin Inc. said it recently spent $71.5 million to repurchase shares in the Honolulu-based company.
Allen Doane, A&B chairman and CEO, said the buyback was made in response to "recent softness" in the company's stock price that made the shares an attractive investment and good use of capital.
A&B stock hit a 52-week low of $41.15 a share on June 27. The 52-week high was in December at $55.40. Yesterday, A&B stock rose 28 cents to close at $43.06.
The company is acquiring up to roughly 1.5 million shares of its stock for $63 million as part of an authorization its board made in December 2004 to acquire up to 2 million shares through the end of this year. The stock is being bought back at prices between $41 and $47 under an arrangement with Goldman Sachs & Co.
In addition, A&B last month bought 200,000 shares of its common stock on the open market for about $8.5 million, or $42.50 a share on average.
The repurchases are intended to reduce the number of shares held by investors, thereby increasing earnings per share. About 44 million shares of A&B stock are outstanding.
A&B stock had been on a rise since 2002 when shares traded in the $20 to $30 range. But the stock price has mostly declined this year. Some stock analysts have downgraded the stock because of perceived higher risk to the company's two biggest areas of business — real estate development and ocean transportation.
"We believe that rising interest rates, volatile fuel prices, little visibility into the company's China (ocean cargo transportation) service, record high housing prices and significantly larger property inventories in Hawai'i add incremental risk to the Alexander & Baldwin story," investment banking firm Caris & Co. said in an announcement last month.
Caris downgraded A&B shares from an average rating to a below-average rating, and said it believed that the stock, at the time trading at about $42 a share, was more fairly valued at about $38.
Reach Andrew Gomes at agomes@honoluluadvertiser.com.
