Breaking: Robinhood Buys Back $605.7 Million Stake from Sam Bankman-Fried in U.S. Government Deal

Robinhood Markets Inc. has finalized a share repurchase agreement worth $605.7 million with the United States Marshal Service, according to a company announcement made earlier today and CNBC report. The deal involves the acquisition of 55.3 million shares at $10.96 each, previously owned by Sam Bankman-Fried's Emergent Fidelity Technologies. The transaction has received approval from the U.S. District Court for the Southern District of New York

Financial Implications

The $605.7 million deal represents a significant financial move for Robinhood, which had initially disclosed its intention to repurchase the stake in February of this year. The company's board had authorized the pursuit of purchasing most or all of the stock at that time.

Market Response

Following the announcement, Robinhood's stock (HOOD) experienced a 3.31% increase, closing at +0.36. This suggests that the market has largely responded positively to the news, although it remains to be seen how this will affect the company's long-term valuation.

Legal Context

The approval from the U.S. District Court for the Southern District of New York adds a layer of legal validation to the transaction. It also closes a chapter on the involvement of Bankman-Fried's Emergent Fidelity Technologies with Robinhood, following the former's bankruptcy protection filing last year.

Background

In May 2022, Bankman-Fried had acquired a 7.6% stake in Robinhood, amounting to over 56 million shares valued at nearly $482 million.

According to a Reuters report dated January 4, 2023, U.S. officials were in the process of seizing more than $400 million worth of Robinhood shares linked to FTX.

Then the shares in question were seized and transferred to the U.S. government's custody following the bankruptcy protection filing by Bankman-Fried's FTX and Emergent Fidelity Technologies last year.

Robinhood's board had approved a plan to repurchase the stake, as confirmed in their fourth-quarter report published on February 8, 2023.