Adidas To Return Up To EUR1.5 Bln To Shareholders; Stock Climbs

(RTTNews) - German sports goods giant Adidas AG (ADDYY.PK, ADDDF.PK) Wednesday said it decided to return up to 1.5 billion euros to its shareholders over the next three years, primarily in the form of share repurchase. The company intends to start buying back shares in the fourth quarter. The stock added over 4 percent in early morning trading.

According to the company, the announcement underlines its strong confidence in the cash generation and growth potential of the Group. The shareholder return program will predominantly be financed from the Group's free cash flow.

The company plans to repurchase shares via the stock exchange for up to 10 percent of the share capital, representing 20.92 million shares.

The purchase price per share may not be more than 10 percent higher or lower than the average stock market price for the Adidas share price on the day of entering into the repurchase obligation.

Robin Stalker, CFO of the adidas Group, said, "We believe that our shares are currently significantly undervalued and this provides an excellent opportunity to optimise the company's cost of capital, deploy cash and create further value for our shareholders."

In addition, the company confirmed its commitment to pay an annual dividend to shareholders in the range of 20 to 40 percent of net income attributable to shareholders.

Adidas has been going through not-so-good times with stiff competition from Nike Inc. (NKE) in North America, amid investor discontent over its share price.

In July, the company had trimmed its fiscal 2014 earnings forecast and sales growth view, citing continued weakness in the golf market, recent developments in Russia/CIS, as well as the impact of its recent strategic measures.

The stock climbed 4.1 percent in early morning trading to 61.68 euros.