Food maker Mondelez International Inc. (MDLZ) boosted its
stock-buyback program by $1.7 billion to return proceeds from a
legal settlement with Starbucks Corp. (SBUX) to shareholders.
The increase brings Mondelez's total buyback authorization to
$7.7 billion through 2016. It plans to buy back $1.7 billion of
stock by the second quarter of next year through an accelerated
share-repurchase agreement.
"Following the resolution of the Starbucks arbitration, we said
we would use the net proceeds of the award to buy back shares,"
said Chairman and CEO Irene Rosenfeld. "This ASR transaction
enables us to do that in a quick and cost-effective manner."
In November, an arbitrator awarded Mondelez $2.23 billion in
damages in a long-running dispute with Starbucks over the coffee
chain's decision to reclaim the distribution of its bagged-coffee
business in 2011.
The company, formerly part of Kraft Foods Group Inc. (KRFT), had
tried to block Starbucks from taking back the business that Kraft
had started from scratch and built up over 13 years.
By the completion of the accelerated buyback, Mondelez will have
returned $4 billion to shareholders since it split from Kraft Foods
last year. The company's market value is about $58.65 billion,
according to FactSet.
Mondelez--which makes Oreos, Cadbury chocolates and Ritz
crackers--has focused on appeasing investors through reimbursements
and by focusing on boosting sales by focusing on emerging markets
such as Brazil and China. The company is investing in those
markets, as well as using restructuring efforts to improve the cost
structure in those places.
In November, Mondelez reported improved third-quarter earnings
on higher organic sales across most markets.
The stock edged up 2.1% to $34.13 in recent trading.
Write to Everdeen Mason at everdeen.mason@wsj.com
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