Samsung has taken several steps over the past couple of years to boost shareholder value. It announced a $10 billion share buyback program in 2015 which was completed in one year. Samsung said that the $10 billion exercise contributed to a 20 percent increase in the stock price over the past year.
To further increase shareholder value, the company promised to increase the dividend yield on its shares. The company also launched another share buyback program worth $8 billion in 2016. The funds were used to purchase and cancel shares.
Three months ago, Samsung announced that its Board of Directors had approved a plan to cancel all existing treasury shares held by the company. The value of the shares at that time was $43 billion.
Companies retain treasury stock to use as a financial resource for merger and acquisition transactions. These shares are also awarded to employees. To limit the impact of this exercise on the financial market, Samsung said that it would cancel the treasury shares in two stages.
The first stage will see the cancelation of 50 percent of the entire holding which amounts to 9 million common and 1.6 million preferred shares. The second stage will be executed in 2018 after the board’s approval.
Samsung today announced that it’s going to cancel its own shares worth 2.0 trillion won ($1.8 billion). The company has also decided to spend an additional 1.7 trillion won ($1.4 billion) to acquire 670,000 common shares which will also be canceled.
The company has also announced a total cash dividend worth 965.35 billion won ($868.69 million) for shareholders which comes down to 7,000 won ($6.2) per share.
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