BOSTON (AP) -- Shares of HealthSouth Corp. briefly climbed to a new 52-week high on Wednesday after the company announced plans to buy back $232 million worth of its stock at a price that's at the top end of a range it set for the offer.
THE SPARK: The country's biggest owner and operator of rehabilitation hospitals on Wednesday announced results of an offer made on Feb. 20. HealthSouth said will buy about 9.1 million shares of its common stock at a price of $25.50 apiece, for a total of about $232.1 million, excluding costs related to the offer.
When it announced the offer last month, HealthSouth said it expected to buy up to $350 million worth of its stock by tapping its revolving credit line and spending some of its cash reserves. HealthSouth expected to repurchase shares in a range of $22.50 to $25.50 apiece through a modified Dutch auction tender.
HealthSouth said on Wednesday that nearly 9.2 million shares were tendered at or below the final purchase price of $25.50. The planned purchase involves about 9.5 percent of the company's outstanding shares.
THE BIG PICTURE: By repurchasing stock, companies reward investors by increasing the value of remaining shares. Per-share earnings can also get a lift as results are divided among fewer shares. Share buyback activity has been increasing in recent months as companies tap into cash reserves that have climbed to record levels since the recession ended in mid-2009. The nearly $118 billion in buyback authorizations last month was more than double the total in the same month a year earlier, according to market research firm Birinyi Associates.
SHARE ACTION: Shares of HealthSouth rose $1.03, or 4.2 percent, to $25.56 in afternoon trading. Earlier in the session, the stock recorded a new 52-week high, climbing to $26.40. The stock traded as low as $18.44 last June.