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Repurchase is 7% accretive to current 2024 consensus EPS estimates
WisdomTree, Inc. (NYSE:WT) ("WisdomTree" or the "Company"), a global financial innovator, today announced the completion of the repurchase of its non-voting preferred shares convertible into 13.1 million shares of WisdomTree common stock from Gold Bullion Holdings (Jersey) Limited ("GBH"), a subsidiary of the World Gold Council, for aggregate cash consideration of approximately $84.4 million, derived from a price per share (on an as-converted basis) of $6.45. The preferred shares have been fully extinguished and the transaction is approximately 7% accretive to current 2024 consensus earnings per share ("EPS") estimates.
WisdomTree Founder and CEO Jonathan Steinberg said, "This repurchase eliminates potential future overhang while generating 7% accretion for stockholders today. It is yet another example of smart management generating impactful results in addition to WisdomTree's best-in-class pace of organic growth relative to our publicly-traded asset manager peers, the scalability of our platform and our leadership in tokenization and blockchain-enabled finance."
Under the terms of the transaction, WisdomTree paid GBH $40 million on the closing date and has agreed to pay the remainder of the purchase price in equal annual installments on the first, second and third anniversaries of the closing date, with no requirement to pay interest. The $6.45 price per share (on an as-converted basis) represents a 3% discount to the trailing 3-day volume-weighted average price (VWAP) of WisdomTree's common stock ending Friday, November 17, 2023.
Recent proactive actions by WisdomTree's management team have generated both earnings accretion and ancillary benefits. The termination of WisdomTree's contractual gold payment obligation ("gold royalty buyout") this past May was 15% accretive to earnings and removed a perpetual stream of payments from the Company's P&L and a $180 million liability from its balance sheet. Today's share repurchase generates an additional 7% accretion to Street forecasts and removes a potential risk of overhang on WisdomTree's stock price had GBH disposed of the 13.1 million shares of common stock underlying the preferred shares by other means.
The repurchased preferred shares were originally issued to GBH in May 2023 in connection with the gold royalty buyout. The investor rights agreement that WisdomTree and GBH entered into in May 2023, which provided GBH with certain rights and obligations with respect to the shares, including registration rights, was terminated in connection with this transaction.
For further information regarding the terms and conditions contained in the stock repurchase agreement and other definitive transaction agreements between WisdomTree and GBH, see WisdomTree's Current Report on Form 8-K filed with the Securities and Exchange Commission in connection with the transaction.
Posted In: WT