VICTOR, N.Y. (WROC) — Constellation Brands officials announced Thursday the company has entered an accelerated share repurchase, known as an ASR, with the Bank of America to repurchase $500 million worth of its own stock.

Company officials say under the agreement, Constellation will receive approximately 1.7 million shares on Friday, about 80% of the expected share repurchases based on the stock’s Wednesday closing price of $231.81.

According to a company press release, the repurchased shares will become treasury shares.

The ASR could be helpful for local shareholders, but it could also be viewed as a “self-serving practice,” according to Jesse Cramer, finance author, and a Cobblestone Capital financial advisor.

“Generally, corporations will repurchase their own stock when they feel like their stock is being undervalued by the stock market,” Cramer said. “They typically use excess cash or low-interest loans to raise capital for the purchase. In doing so, corporations help out existing shareholders.

“First, they deploy the company’s dollars in an ostensibly efficient manner — they’re buying something they feel is undervalued,” Cramer said. “Second, they are increasing their shareholders’ concentration in the corporation. By decreasing the number of outstanding shares in the market, each shareholder’s percentage of ownership increases. This is good for shareholders.

“At most corporations, the leaders and officers of the company tend to be among the biggest shareholders,” Cramer said. “Hence, stock repurchases can be viewed as a self-serving practice.”

Share buybacks are also a more tax-friendly method to return earnings to shareholders than dividends, which are taxable, according to Bankrate.

Constellation, a worldwide leader in the beverage and alcohol sector, reported Thursday its fourth-quarter net income rose to $395.4 million, up from $382.9 million in the same quarter a year prior (full earnings report below).

Also Thursday, Constellation announced the company acquired the remaining interest in Austin Cocktails, a “female-founded ready-to-drink cocktail company out of Austin, Texas.”

The Victor-based company, announced last year its plans to move its headquarters to downtown Rochester, and bring hundreds of jobs with it.

The company will move its primary operation, and nearly 400 jobs to the Aqueduct Building on East Broad Street in Rochester, with approximately 170,000 square feet of space.

According to the governor’s office, plans include an $82 million investment with construction and renovations on the building are tentatively scheduled to start by the middle of next year and expected to be ready for occupancy by 2024.

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