Buyback will counter Arad's big selloff
Marvel moved faster than “Daredevil” to counter Avi Arad’s massive selloff last week.
Comicbook firm announced Monday it had authorized up to $100 million in new stock buybacks just five days after Arad cashed out for $60 million on his way out the door as Marvel studio chief.
Company is not obligated to spend that $100 million, but it may need to to jump share price, which despite a recent spike is down more than 10% compared with a year ago.
Authorization comes as Marvel announces it spent $100 million in May on buybacks, bringing total buybacks to date to $600 million. A good chunk of the $100 million is thought to be the Arad shares the company chose to absorb.
But some Wall Streeters pointed out that since the authorization doesn’t commit Marvel to actually spend any money, it’s more of a political move meant to deflect attention away from the Arad sale.
Concurrent with the buyback on Monday, Marvel Entertainment CEO Isaac Perlmutter bought approximately 6 million shares at his option price of just over $2. Exec is eligible to sell those shares by May or when the new buyback is complete, whichever comes first. While the purchase is ostensibly unrelated, move will free nearly $15 million for Marvel to help finance buybacks.
Marvel is in need of cash in a year with relatively few pics out — and with Arad’s move abruptly forcing company to absorb $60 million in shares.
Buyback also dispels rumors that Arad’s departure is part of a larger plan to put Marvel on the block. Buying back stock at a time when a company is in material sales discussions is a violation of SEC rules.
Arad exited Marvel last week to become a producer and immediately sold more than 3 million shares several days after shares had fully vested.
Insiders say Marvel had been content to proceed on a relatively slow buyback pace when Arad’s move forced their hand. “It’s clear Marvel didn’t want to be doing any of this,” said one Streeter.
Marvel on Monday also released Arad’s new employment agreement.
Producer will also serve as executive producer on “Spider-Man 3” and potential sequels, but has to work out a separate agreement with Sony for those services, which include serving as liaison between the studio and Marvel.
For his work as a Marvel employee through the end of 2006 — for which he will have the title of creative consultant for the rest of the year — he will get a bonus based on box office performance for either “Ghost Rider” or “Spider-Man 3” (which will both be released by Sony next year), but not both. Agreement also calls for stock options granted to Arad in 2004 to continue to vest while he works as a producer, even though he will no longer be a Marvel employee.
Company chose not to include the compensation Arad will receive as a producer on “Iron Man” and “The Incredible Hulk.”
(Ben Fritz contributed to this report.)