Apple Preps Bond Sale for Stock Buyback Initiative
Ahead of last week's earnings release, Apple announced that it would more than double its capital return program from $45 billion to $100 billion, with a 15 percent increase in dividend payments and a massive stock buyback initiative.
To facilitate the expanded capital return program, which will amount to a share repurchase of $60 billion, Apple must take on debt, a process that the company initiated today. According to Reuters, Apple has begun investor calls, led by both Deutsche Bank and Goldman Sachs, and it has filed the necessary SEC paperwork for a debt offering.
The only major tech company without a penny of debt on its books, Apple stunned the markets last week by announcing it could sell debt for the first time to help fund a $100 billion capital return program for shareholders.
Any bond offer from the makers of the iconic iPhone and iPad would be highly sought after by investors, and it is believed the company could raise funds at a cheaper rate than even Triple A rated Microsoft.
Apple has a long history with both Deutsche Bank and Goldman Sachs. According to Bloomberg, the former advised Apple on its takeover of Next Computer, while the latter has been advising Apple on a cash plan. It is unknown if one of the two banks will lead the upcoming bond offering.
Though Apple has a cash pile that exceeds $145 billion, only a portion of that is available in the United States, leaving the company unable to fully fund its stock buyback. Borrowing money will allow Apple to avoid the taxes that it would incur moving money from overseas.