The deal, valued at $605.7 million, comes after Robinhood’s shares were seized and transferred to the custody of the U.S. government following the bankruptcy filing of Emergent Fidelity Technologies and Bankman-Fried’s FTX, Reuters reported Friday (Sept. 1).
Robinhood disclosed the deal in a filing with the Securities and Exchange Commission (SEC), saying it entered into the share purchase agreement with the USMS Wednesday (Aug. 30) and the transaction closed Thursday (Aug. 31).
“The company previously announced on February 8, 2023, that its board of directors had authorized it to pursue purchasing most or all of the shares,” the company said in the filing.
The agreement involves Robinhood’s repurchase of 55.3 million shares for $10.96 per share, according to the filing. The sale received approval from the U.S. District Court for the Southern District of New York.
The news has already had a positive impact on Robinhood’s stock, with shares climbing over 3% in premarket trading, Reuters reported.
Before the bankruptcy of his companies, Bankman-Fried, who previously held a 7.6% stake in Robinhood, had expressed support for the platform and potential partnership opportunities, the report said. Nevertheless, the collapse of FTX wiped out his fortune, and he is currently facing fraud and conspiracy charges related to the bankruptcy.
When announcing Feb. 8 that Robinhood hoped to buy back the 55 million shares from Emergent Fidelity Technologies, Robinhood executives said the move would benefit the company, but they could not say at the time when or if the share purchase would take place. Robinhood CEO Vlad Tenev said, “there is limited precedent for this type of situation.”
Tenev also said of the planned purchase Feb. 8: “We believe it will be accretive over time and removes a distraction for shareholders.”
Chief Financial Officer Jason Warnick added at the time: “We’re confident in the future of our business, so we think it would be a smart use of our excess corporate cash to buy most or all of the roughly 55 million shares while continuing to have a strong balance sheet to invest for growth.”