Samsung Rebuys $2.2B Of Its Own Shares To Appease Investors

Advertisement
Advertisement

Samsung Electronics completed a new major repurchase of its shares on Monday, with the Seoul-based original equipment manufacturer (OEM) confirming that it bought back 2.524 trillion won worth of stock, which translates to approximately $2.271 billion. All of the treasury shares acquired by the company will be canceled in an effort to improve shareholder value, the South Korean tech giant said, adding that its second repurchasing round ran from April 28 to July 24. The repurchase saw Samsung's treasury stocks temporarily rise by 7.86 percentage points, with the company's latest move being primarily aimed at pleasing its major investors, many of whom have recently claimed that Samsung is severely undervalued as a company.

The first repurchasing round Samsung led this year was also the largest one in its history, with the Korean consumer electronics manufacturer acquiring 9.3 trillion won ($8.37 billion) of its shares in January. The initially reacquired shares are also slated to be canceled, which Samsung previously said will happen by the end of the year. The company didn't provide a specific time frame for the cancellation of the newly acquired stock, though a number of industry watchers are expecting the firm to also scrap those shares by early 2018 and its first board meeting in the upcoming year. Samsung's efforts to unlock additional shareholder value for its investors started in late 2016, not long after the Galaxy Note 7 fiasco that put additional pressure on the company. Back then, a number of minority investors advocated for Samsung to adopt a holding company structure, which the Seoul-based OEM said will consider, though the proposition was ultimately dismissed by the firm this spring, with a number of its senior executives claiming that the transition to a new ownership structure would be too convoluted to be effective.

That turn of events displeased a number of Samsung's investors despite the company's strong performance in recent quarters, prompting the tech giant to take other measures to increase its shareholder value. Among other things, Samsung also used half of its surplus cash to boost dividends in recent quarters and is expected to continue doing so in the future. The firm is planning to repurchase its treasury stocks a few more times before the end of the year, according to its previous statements.

Advertisement