MEMC buying back $500M in stock

May 17, 2008 – MEMC Electronic Materials Inc. says it has authorized a share repurchase program for up to $500 million of its shares. Specific timing and amounts were not disclosed; the company said they would vary depending on market conditions and other factors. The plan can be modified, extended, or terminated at any time, the company added, in a statement.

Financial analysts and investors greeted the news generally with optimism, though MEMC shares were basically flat the day after the news. CIBC says investors have been “anxiously awaiting a productive use” for MEMC’s growing cash balance, and this program would increase EPS by $0.15 (about 3.5%) if completed in 2008. CIBC also notes that MEMC has generated nearly enough free cash flow over the past two quarters to fund the buyback.

Meanwhile, UBS notes that this buyback program — the company’s first-ever such plan — is probably more to reiterate managements’ confidence in the business than anything else. The deal also allows MEMC to buy shares directly from the Texas Pacific Group, which still owns 4.7 million warrants with a strike price of $3.


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