Pacific Telesis to Buy Back 25 Million of Its Shares

Pacific Telesis said Monday that it plans to buy back up to 25 million shares of its common stock, a $1.2-billion undertaking at current market prices and the largest repurchase plan in the company’s six-year history.

The San Francisco-based parent of Pacific Bell has already repurchased 30 million of its own shares since October, 1987, but that was accomplished through three separate buyback programs of 10 million shares each.

“We continue to believe that repurchasing our stock at current prices is a very good investment for our share-owners,” said Sam Ginn, Pacific Telesis chairman and chief executive.

Ginn said the purchase will be financed through the company’s own funds as well as short-term borrowings. Shares will be bought in the open market and through private negotiations.

Steve Sazegari, senior telecommunications analyst for the Dataquest research firm in San Jose, said the company apparently decided that shareholders would benefit more from a higher market value for their holdings than from increasing current dividend payments. Buying up the shares will also enable Pacific Telesis to distribute stock under a recently announced employee stock purchase plan without creating a new issue, he added.

There were 416.3 million shares of Pacific Telesis common stock outstanding at the end of 1989. The latest buyback program would reduce that to 391.3 million shares, close to the 385.7 million shares outstanding at the end of 1983.

Since Pacific Telesis stock began trading Nov. 21, 1983--in anticipation of the company’s takeover of American Telephone & Telegraph’s local phone businesses in California and Nevada on Jan. 1, 1984--its common stock has generated a total return (price appreciation plus dividends) of 335% through 1989.

The company’s stock closed at $49 per share, up $1.25, in New York Stock Exchange trading Monday.