Varian Medical Systems Inc. (NYSE:VAR) took out a loan with Bank of America N.A. (NYSE:BAC) to fund the buyback of $225 million worth of its common stock under an accelerated share repurchasing program, according to a Securities & Exchange Commission filing.
The Palo Alto, Calif.-based cancer treatment maker amended its revolving credit facility with the bank to increase its borrowing capacity from $150 million to $225 million.
Varian Medical will pay Bank of America $225 million and receive approximately 3.8 million shares based on the closing price of its stock on August 24, according to the filing. Shares purchased under the repurchase agreement will be retired.
The company said it had 124.5 million shares of common stock outstanding as of the end of the third quarter.
“Given the strength of Varian’s balance sheet and the low interest rate environment, we have an opportunity to return shareholder value through this program,” CEO Tim Guertin said in prepared remarks.
The company posted a double-digit top-line increase during its third quarter, but net earnings rose only 0.1 percent on a $6.4 million loss from the sale of its Accel lab instruments division to Bruker Corp. (NSDQ:BRKR).