Willis Group Holdings Limited said it would repurchase 3.8 million shares of its common stock from an affiliate of Lehman Brothers Inc. in an accelerated stock repurchase program.
The announcement late yesterday from the insurance brokerage firm's New York office said the initial purchase price for the transaction would be $150 million.
Willis said the repurchase is part of its previously announced stock repurchase program.
Under the terms of the arrangement, the broker said the repurchased shares are subject to a price adjustment based on the volume weighted average market price of Willis' common shares during the term of the program. The repurchase is expected to be completed in the first quarter of 2007.
All of the shares repurchased under the agreement will be retired.
Including this transaction, the company expects to repurchase 5.4 million shares for $211 million during fiscal-year 2006 and would have $789 million of authorized share repurchases remaining under its existing buyback authorization.
David Small, an analyst with Bear Stearns, said that Willis' move is part of an expected trend for insurance brokers to repurchase their stock over the next few years.
He said Bear Stearns is theorizing that as growth prospects slow for insurance brokers, they will begin buying back shares to improve their earnings per share.
Willis bought back $32 million of its shares by the end of the third quarter, the note said.
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