A day after a failed buyout deal with Goldman Sachs sent its stock plummeting, Atlanta-based Ebix announced a $100 million stock buyback program to shore up its shares.
The insurance software company’s stock continued to slide Friday as investors weighed the New York investment firm’s decision to call off its $820 million deal due to an investigation into alleged misconduct at Ebix.
Ebix said it received a letter from the U.S. Attorney’s Office for the Northern District of Georgia that an investigation had been opened into allegations of intentional misconduct, which was brought to authorities’ attention by pending shareholder class-action lawsuits. The allegations deal with accounting and reporting practices. The Securities and Exchange Commission is also investigating.
The company said Thursday that it is cooperating with authorities, and on Friday it said “recent allegations published in the media and elsewhere are without merit.”
Ebix provides software products and e-commerce services to more than 100 companies in 50 countries. The companies include providers of life, annuity, health, and property and casualty insurance.
After falling 44 percent Thursday following news of the failed deal with Goldman Sachs, Ebix’s shares took another hit Friday, shedding more than 13 percent to close at $9.52, down $1.48 on Wall Street. The company’s 52-week closing high is $24.90.
The company said it will buy back $100 million of its common shares from time to time within the next two years. Such repurchases can increase earnings per share and boost the market value of remaining shares.
The company said it will pay for the stock repurchases with cash on hand and future cash flow from operations. It said it currently has $35.5 million in cash on hand.
“The board of directors is confident that the company is executing on an effective business strategy, which is generating both strong free cash flow and a robust contract pipeline,” the company said in a statement Friday.