7 Years After the 9 Trillion Won Acquisition in 2017
Samsung Electronics has decided to repurchase its own shares worth a total of 10 trillion won to enhance shareholder value. This is the first repurchase in seven years since the 9.3 trillion won buyback in 2017. The move is interpreted as a strong intention to defend the stock price amid a noticeable downward trend, including recently hitting the '40,000 Electronics' mark.
On the 15th, Samsung Electronics held a board meeting and announced that it approved a plan to repurchase its own shares worth 10 trillion won in installments over the next year. Of this, 3 trillion won worth of shares will be bought within three months and then entirely canceled.
The shares to be repurchased and canceled through on-market purchases from the 18th of this month until February 17 of next year consist of 50,144,628 common shares and 6,912,036 preferred shares. Regarding the remaining 7 trillion won worth of shares, Samsung Electronics explained that the company will discuss and decide on various ways and timing to utilize them from the perspective of enhancing shareholder value when individual board resolutions for share acquisition are made.
This decision appears to be a response to the stock price decline caused by recent poor earnings, intensified US-China conflicts due to the potential re-election of Trump, and a bleak outlook for the semiconductor industry.
Earlier this year, executives including Han Jong-hee, Vice Chairman and Head of the Device eXperience (DX) Division, and Jeon Young-hyun, Vice Chairman and Head of the Device Solutions (DS) Division, took responsibility by purchasing a large number of shares themselves, but the stock price has continued to fall daily. The previous day, the stock plunged to '40,000 Electronics' for the first time in four years and five months, dropping the market capitalization below 300 trillion won. However, on this day, aided by foreign investors' bargain buying, the stock rebounded for the first time in six trading days, recovering to the 50,000 won range.
Previously, in October 2015, Samsung Electronics announced a mid- to long-term shareholder return guideline and implemented a special share repurchase and cancellation program worth 11.4 trillion won (approximately 10 billion dollars). In 2017, it repurchased shares worth 9.3 trillion won and canceled 50% of the treasury shares it held. As a result of these efforts, the number of issued shares of Samsung Electronics decreased by 12.4% for common shares and 20.1% for preferred shares compared to the end of 2015, thereby increasing the value per share.
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