Adient increases share buyback authorization and adopts tax asset protection plan
Automotive seating manufacturer Adient has increased its share repurchase program to $1 billion and implemented a tax benefit preservation plan to protect its U.S. net operating loss carryforwards.
Adient's board of directors has approved a $400 million increase in the company's share repurchase authorization, bringing the total program to $1 billion. This move follows the initial launch of the repurchase program in November 2022, under which the company has already bought back $565 million in shares.
Concurrent with the capital allocation update, the board adopted a Tax Benefits Preservation Plan. The mechanism is designed to prevent a change in ownership, as defined under Section 382 of the U.S. Internal Revenue Code, which could trigger limitations on the company's ability to utilize approximately $3.5 billion in U.S. net operating loss carryforwards and other tax attributes.
CEO Jerome Dorlack stated that the capital strategy aims to balance shareholder returns with maintaining a flexible balance sheet. The preservation plan generally prevents any entity from acquiring a 4.95% or greater stake in the company without prior board approval.
Adient intends to seek shareholder approval for the tax preservation plan at its next annual meeting. The company plans to disclose further details through filings with the U.S. Securities and Exchange Commission.