Nike plans to buy back $12 billion in stock shares

The sporting goods manufacturer Nike plans to buy back shares worth $ 12 billion and split shares in the ratio of 2 to 1.

The new four-year buyback plan will take effect when the current $8 billion authorization is completed, which is expected to occur before the end of the current fiscal year, Beaverton, Oregon-based Nike said Thursday in a statement.The stock split will be in the form of a 100 percent stock dividend payable on Dec. 23 to holders as of Dec. 9.

The news comes after the company announced last month that it would increase the annual sales by about 60% to $ 50 billion by 2020, helped by growth in its online business. Since the beginning of the year until the end of trading on Thursday Nike's shares rose 31%. On Friday the shares rose 5.5 %to $132.65.

Net income in the fiscal year ended in May rose 22 percent to $3.27 billion as sales climbed 10 percent to $30.6 billion. The company had $5.92 billion in cash, equivalents and short-term investments at the end of the fiscal year.

Divident boost

The company, which last split its stock in December 2012, also increased its quarterly dividend to 32 cents a share from 28 cents.

In splitting its stock, Nike is taking an increasingly rare step among U.S. businesses. Splits reached their peak in the 1990s when companies sought to broaden their appeal to individuals by keeping stock prices low. These days, fewer corporations care about their share prices reaching stratospheric levels. Amazon.com Inc., for instance, trades above $600, while Priceline Group Inc. trades at more than $1,200.

Nike’s stock has more than tripled since the end of the last recession, bolstered by the company taking market share from Adidas AG in soccer and increasing its presence in China and South America. Nike has also benefited from fashion shifting toward the athletic and casual - a trend known as “athleisure.” And the company has streamlined its operations by selling off brands such as Umbroand Cole Haan.