AOL (also known as the company that signs TechCrunch’s paychecks) has announced this morning it has started a “Dutch auction” tender offer to buy back shares of its common stock, up to $400 million. The Dutch auction format means that shareholders will say how many shares they want to sell at what price. AOL will then determine the lowest price per share in that range and buy the amount it wants. Shareholders will be able to tender some or all of their shares at price within a $27 to $30 per share, the company says.
The $400 million aggregate purchase price of shares includes the approximately $40 million remaining from the initial $250 million stock repurchase authorized in August of 2011 and brings the total amount AOL intends to return to shareholders in 2012 to approximately $1.1 billion.
News of this repurchase program was reported earlier this week, when sources speaking with All Things D claimed that AOL had decided a stock buyback was a better way for the company to realize its gains from the $1.1 billion sale of 800 patents. AOL sold 800 patents to Microsoft in April, following pressure from shareholders, led by Starboard Value, to realize some of the value from those patents.
AOL CEO Tim Armstrong confirmed the earlier reports that the move to initiate a stock buyback was directly related to the patent deal, saying “today’s announcement is an important first step in returning 100% of the proceeds from our patent transaction as expediently and tax efficiently as possible. AOL is focused on continued execution and operational improvement. Concurrently reducing our shares outstanding at attractive prices underscores both financial prudence and our significant belief in the opportunity in front of AOL.”
The tender offer starts today, and will expire at 5:00 PM (NYC time), on August 2, 2012. AOL shares are currently up 3.26% to $28.20, currently.