Robinhood finalizes a $605.7 million share repurchase deal, acquiring 55.3 million shares from Emergent Fidelity Technologies, leading to a 3.31% stock price increase and court approval.
Key Points
- Robinhood finalizes $605.7M share repurchase with U.S. Marshal Service for 55.3M shares at $10.96 each, owned by Emergent Fidelity Technologies.
- Robinhood’s stock (HOOD) rises 3.31%, closing at +0.36, indicating positive market response.
- U.S. District Court approves the transaction, ending Bankman-Fried’s involvement after his bankruptcy protection filing.
- Robinhood’s board approved this move earlier in 2023, allowing the company to regain control of the shares, boosting market confidence.
Robinhood Markets Inc. announced today that it has finalized a share repurchase agreement worth $605.7 million.
This agreement involves the acquisition of 55.3 million shares at $10.96 each and is with the United States Marshal Service.
The shares were previously owned by Sam Bankman-Fried’s Emergent Fidelity Technologies, according to a report by CNBC.
This move represents a significant financial decision for Robinhood, as the company had disclosed its intention to repurchase the stake earlier this year. In February, the board had authorized the pursuit of purchasing most or all of the stock.
Robinhood is buying SBF’s 605.7 million worth of shares back pic.twitter.com/rfAAh59peQ
— borovik.eth (@3orovik) September 1, 2023
Market Response
Following the announcement of the share repurchase agreement, Robinhood’s stock (HOOD) experienced a 3.31% increase, closing at +0.36.
This indicates that the market has responded positively to the news. However, it remains to be seen how this will impact the company’s long-term valuation and performance.
The transaction has received approval from the U.S. District Court for the Southern District of New York, adding a layer of legal validation to the agreement.
This approval also marks the end of the involvement of Bankman-Fried’s Emergent Fidelity Technologies with Robinhood. The company had filed for bankruptcy protection last year.
Background
In May 2022, Bankman-Fried acquired a 7.6% stake in Robinhood, which amounted to over 56 million shares valued at nearly $482 million.
However, U.S. officials began the process of seizing more than $400 million worth of Robinhood shares linked to FTX, according to a Reuters report from January 2023.
These shares were seized and transferred to the U.S. government’s custody following the bankruptcy protection filing by Bankman-Fried’s FTX and Emergent Fidelity Technologies.
Robinhood’s board had already approved a plan to repurchase the stake, as confirmed in their fourth-quarter report published on February 8, 2023.
Overall, the completion of this share repurchase agreement represents a significant step for Robinhood.
It allows the company to regain control of the shares previously owned by Bankman-Fried’s Emergent Fidelity Technologies.
The market’s positive response indicates confidence in Robinhood’s decision and potential for future growth.
